Asian stocks recover ahead of Fed announcement
HONG KONG — Asian stock markets recovered modestly Wednesday as investors awaited the outcome of the U.S. Federal Reserve meeting later in the day.
Markets fluctuated in early trade before turning mostly green after tumbling Tuesday amid a World Bank forecast for a deeper recession this year. Crude oil prices weakened, while the dollar rose against the yen.
The Fed is widely expected to keep its key interest rate near zero, but investors will be watching closely the central bank’s assessment of the economy for clues about any recovery and whether interest rates might be raised to head off inflation.
Analysts say if the Federal Reserve’s statements are more gloomy than expected, that could lead investors to unload shares as they lower their expectations for an economic recovery. Optimism about a recovery from the worst global recession in decades has lifted markets dramatically in recent months.
Markets “are pricing in a clear recovery story in the U.S. and the global economy, but I think the Fed will be less upbeat,” said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong.
“If the Fed does show cautiousness … equities and commodities could suffer a little bit because investors would be more afraid they’ve gotten ahead of themselves.”
Japan’s Nikkei 225 stock average added 52.75, or 0.6 percent, to 9,602.36 even as new figures showed the export-dependent country’s trade continued to sag. Exports in May dropped 40.9 percent from a year earlier as consumers overseas bought fewer of the country’s cars, electronics and other mainstay products.
Elsewhere, Hong Kong’s Hang Seng rose 233.38, or 1.3 percent, to 17,771.75 and South Korea’s Kospi was up 0.6 percent.
Australia’s benchmark gained 0.1 percent, Taiwan’s index jumped 3 percent and Singapore’s market was higher by 1.8 percent.
Wall Street also tread cautiously ahead of the Fed’s announcement after it finishes its two-day policy meeting on Wednesday.
The Dow fell 16.10, or 0.2 percent, Tuesday to 8,322.91. The Standard & Poor’s 500 index rose 2.06, or 0.2 percent, to 895.10, and the Nasdaq composite index fell 1.27, or 0.1 percent, to 1,764.92.
U.S. futures pointed to a higher open. Dow futures rose 23, or 0.3 percent, to 8,280 and S&P futures gained 1.8, or 0.2 percent, to 892.
Oil prices fell below $69 a barrel, partially reversing gains sparked by a weakening U.S. dollar. Benchmark crude for August delivery was down 75 cents to $68.49. The contract gained $1.74 overnight.
The dollar strengthened to 95.62 yen from 95.26. The euro rose to $1.4097 from $1.4066.
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