Talking Points:
- Asian stocks were broadly higher
- Focus was of course on the US Federal Reserve
- The Nikkei was closed for a holiday break, leaving the Hang Seng to lead
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Asia Pacific markets were higher Wednesday, tracking Wall Street gains as investors looked to the US Federal Reserve’s March monetary policy meeting. It will give its verdict just before most local bourses open on Thursday.
The Fed is widely expected to raise the cost of borrowing at its first conclave under new Chair Jerome Powell. He will give a press conference after the decision and the markets will of course pace a huge premium on any clues as to how many more might come this year, with most now expecting another two or three moves.
The central bank is also expected to be upbeat about US economic prospects, although the possibility of a more protectionist White House continues to glower. Still, risk appetite was buoyant through the session and, with Japanese markets closed for the vernal equinox break, Hong Kong’s Hang Seng was left to lead. It rose more than 1% at one point, with China-linked stocks among the best performers.
That index was up 0.8% at the close, with the ASX 200 up 0.3% and Chinese stocks also higher.
The US Dollar spent the early part of the session broadly stronger but gave up some of its gains as European hours drew closer. Gold prices were steady as the decision loomed, while crude oil prices got a lift from the possibility of rising Mideast tensions. Saudi Arabia’s Crown Prince Mohammed bin Salman is in the US for a state visit, which has reportedly raised speculation that Washington could increase sanctions on Iran. There were also signs of healthy crude demand.
The day’s standout technical chart was the Hang Seng’s. The uptrend channel from March 5’s indecisive daily candle remains well respected and has taken the index up to 6-week peaks Wednesday. That channel suggests that support comes in some way below the market at 31222.5.
Still to come are UK employment and government borrowing figures, US current account, oil inventory numbers and existing home sales. However all these will of course be mere warm-up acts to the Fed's decision.
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--- Written by David Cottle, DailyFX Research
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