NEW YORK: Stocks in Asia rose for a fourth day, serving as a contrast to the US where a selloff continued. Gold traded near a fresh record.
Shares in Japan and South Korea rose, while China’s slipped and Hong Kong’s fluctuated. Contracts for US stocks advanced after benchmarks slid on Tuesday (March 18). Investors have slashed holdings of US equities by the most on record while cash levels jumped, according to Bank of America Corp.’s latest survey.
Uncertainty over President Donald Trump’s economic policies, particularly around trade and tariffs, has spurred fears of a recession, with traders seeking clarity from the Federal Reserve policy decision later Wednesday. Investors have also been hunting for opportunities elsewhere, with benchmarks in China and Japan rallying in recent weeks. A Bank of Japan announcement is due, with policymakers expected to keep the benchmark interest rate unchanged.
"It’s a case of ‘no news is good news’ for traders when it comes to tariffs,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. "Having said that, there will be some underlying nerves about how the upcoming reciprocal tariffs will impact exporters across Asia.”
Treasury yields rose. The greenback drifted upward against its Group-of-10 peers, and the yen fell for a fourth day ahead of the BOJ decision.
Although the BOJ is expected to leave rates unchanged after an increase in January, Governor Kazuo Ueda "could start to prepare markets for the next hike, which we see coming on May 1,” Taro Kimura of Bloomberg Economics wrote. Japan’s wages need to rise by at least three per cent over the next two years to achieve the central bank’s sustainable inflation target, according to economists at Goldman Sachs.
Separately, Japan’s exports rose at a faster pace as businesses increased orders ahead of the rollout of higher tariffs in the US.
Elsewhere in Asia, Chinese banks were set to slash rates on consumer loans to record lows as policymakers ramp up stimulus to stabilise growth. Beijing is seeking to ignite consumer spending and stoke local demand to help make the economy less reliant on trade and exports. Investors will also be monitoring market turmoil in Indonesia, where mass selloffs triggered circuit breakers and trading halts on Tuesday.
Tech firm Xiaomi Corp. rose for a fifth day in Hong Kong after reporting its fastest revenue growth since 2021 on electric vehicles, while Xpeng Inc. declined as its volume guidance came in short of some analyst expectations.
Earnings are expected later from the likes of Tencent Holdings Ltd., Anta Sports Products Ltd. and Muyuan Foods Co.
In commodities, oil slipped as broader market weakness and concerns about a global glut of crude overshadowed escalating tensions in the Middle East. Meanwhile, gold pulled back from a record high above US$3,030 an ounce.
The Fed is expected to hold interest rates steady and its quarterly dot plot should give investors more insight into the outlook for the economy. Traders will also be focused on Fed Chair Jerome Powell’s press conference and his juggling act between communicating the central bank’s current view of the economy and weighing the potential impact of Trump’s trade policy.
"Amidst a deteriorating economic backdrop caused by tariffs and general trade uncertainty, the markets are looking for the proverbial ‘Powell put,’ hopefully expressed in dovish guidance and a lowered dot plot in the updated Summary of Economic Projections, said Kyle Rodda, a senior market analyst at Capital.com.
Talk about a Fed put has risen after a rapid stock selloff. But anyone expecting some reassurance at the March meeting will be disappointed, according to Anna Wong at Bloomberg Economics.
Uncertainty over geopolitics and the Fed’s interest-rate decision overshadowed better-than-expected factory output data that eased concern of weakening manufacturing. Other data released Tuesday showed a rebound in US home construction.
Traders’ concerns showed as the S&P 500 fell 1.1 per cent on Tuesday while the Nasdaq 100 slid 1.7 per cent. Nvidia Corp. sank 3.4 per cent despite laying out plans to expand its AI reign with robots and desktop systems, Tesla Inc. dropped 5.3 per cent and Meta Platforms Inc. became the last of the Magnificent Seven stocks to lose its year-to-date gain.
Options traders are pricing in a 1.2 per cent move in the S&P 500 in either direction on Wednesday - up from an average of 0.8 per cent for Fed days over the past year, according to data from Stuart Kaiser, Citigroup’s head of US equity trading strategy.
"Historically, Fed days when rates have been left unchanged have tended to see solid gains,” Bespoke Investment Group strategists said. - Bloomberg
