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Asia report: Markets mixed ahead of Fed decision

Wed 20 September 2017 10:10 | A A A

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(ShareCast News) - Markets in Asia were mixed on Wednesday, with volumes lighter as investors kept their wallets closed ahead of the end of the US Federal Reserve's two-day meeting.

In Japan, the Nikkei 225 was ahead 0.05% at 20,310.46, as the yen gained 0.3% on the dollar, last trading at JPY 111.25.

The latest development in the saga that is Toshiba's attempts to offload its valuable memory chip division came in the form of the technology conglomerate choosing a consortium backed by Bain Capital as its preferred bidder.

Korean blue chip SK Hynix was a part of the consortium, with rumours swirling that US technology firms Dell and Apple were also involved.

Earlier in the week, reports suggested a separate group involving US memory giant Western Digital was Toshiba's preferred suitor.

Western Digital had earlier tried to block previous attempts by Toshiba to sell its memory subsidiary, claiming it had the right to more involvement due to its joint venture with the Japanese firm at a manufacturing facility.

Toshiba has been gradually making attempts to sell the memory chip division for some time, in a bid to stem a cash crisis brought on by the failure of its US nuclear development subsidiary Westinghouse.

Investors were also looking to the Bank of Japan, which began its two-day meeting on Wednesday, ahead of an interest rate decision on Thursday.

Trade data released on Wednesday suggested a healthy outlook for the country's economy, with exports up 18.1% year-on-year in August, well ahead of Reuters-polled expectations for 14.7%.

Japan's trade surplus came in at JPY 113.6bn, also beating expectations for JPY 93.9bn.

On the mainland, the Shanghai Composite was up 0.28% at 3,366.37, and the smaller, technology-heavy Shenzhen Composite added 0.83% to 2,012.23.

South Korea's Kospi was off 0.16% at 2,412.20, while the Hang Seng Index in Hong Kong was up 0.27% at 28,127.80.

Carmakers were charging in Seoul, while retailers fell and technology stocks were mixed - Hyundai Motor was up 1.43%, Lotte Shopping slid 4.55% and Samsung Electronics was 0.19% firmer.

Investors were looking to the Federal Open Market Committee's two-day meeting in the US, where the central bank's decision makers were widely expected to stand pat on interest rates.

The dot plot, which shows where Fed members are standing on future interest rate rises, was more in focus, with expectations for a December hike increasing this week.

According to the CME Group's FedWatch, the likelihood of an increase in interest rate targets in the last month of the year was now almost 63%.

"With tepid inflation, [the Fed's] dot plot for the longer term is more vulnerable to downward revisions and this could potentially weigh down the dollar," noted Mizuho Bank market economist Zhu Huani.

Investors were also keen for more detail around how the Fed planned to unwind its mammoth $4.5trn balance sheet.

Oil prices were higher during the Asian session, with Brent crude last up 1.09% at $55.75 per barrel and West Texas Intermediate adding 1.19% to $50.50.

In Australia, the S&P/ASX 200 shed 0.08% to 5,709.09, with the hefty financials subindex losing 0.29% and the telecommunications services sector down 1.45%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 was up 0.7% at 7,819.24, with flag carrier Air New Zealand and fuel supplier Z Energy on the front foot, rising 1.3% and 2.3% respectively.

The two firms had come under pressure in recent days, amid a fuel crisis resulting from the severing of a fuel pipeline between the large Marsden Point refinery in the Northland region, and the country's commercial and population centre of Auckland.

A number of flights were cancelled at Auckland Airport due to a shortage of jet fuel, with government staff told to cancel all non-essential travel, while petrol stations across the city were reported to be running our of higher-octane product and diesel.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.5% at AUD 1.2424 and the Kiwi advancing 0.65% to NZD 1.3580.

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