Asian shares declined on Wednesday as investors awaited a decision on interest rates by the Federal Reserve. Here’s a roundup of the market activity in major Asian countries:
Japan: Nikkei 225 Falls 0.1%
Japan’s Nikkei 225 index (JP:NIK) fell 0.1% in morning trading. The country’s trade data showed that exports fell 0.8% last month compared to a year ago. Exports to China experienced the sharpest decline, dropping 11%, while exports to the US rose 5.1% and exports to Europe surged 12.7%. Notably, auto exports saw an impressive increase of 40.9%, and semiconductors also saw growth of 8.1%.
Australia: S&P/ASX 200 Slips 0.6%
Australia’s S&P/ASX 200 index (AU:XJO) slipped 0.6% as investors reacted to the Fed’s upcoming decision.
South Korea: Kospi Edges Down 0.1%
South Korea’s Kospi index (KR:180721) edged down 0.1% in response to the uncertainty surrounding interest rates.
Hong Kong: Hang Seng Dips 0.4%
Hong Kong’s Hang Seng index (HK:HSI) dipped 0.4% amidst cautious investor sentiment.
Shanghai: Shanghai Composite Sheds 0.3%
The Shanghai Composite index (CN:SHCOMP) shed 0.3%, reflecting the market’s anticipation of the Fed’s announcement.
In Indonesia (ID:JAKIDX), stocks inched higher while they slipped in Singapore (SG:STI) and Taiwan (TW:Y9999).
Chinese Economy Update
Officials in Beijing acknowledged the challenges in promoting growth in the world’s second-largest economy. However, they expressed confidence in the ongoing recovery and reassured reporters about their ability to maintain stability in the financial markets.
This news comes after a mixed day on Wall Street, where the S&P 500 (SPX) slipped 0.2% to 4,443.95, the Dow Jones Industrial Average (DJIA) dropped 0.3% to 34,517.73, and the Nasdaq composite (COMP) lost 0.2% to 13,678.19.
Markets have been experiencing fluctuations for weeks as uncertainty mounts over whether the Federal Reserve (Fed) will continue its market-shaking hikes to interest rates. The Fed’s decision to push its main interest rate to the highest level in over two decades has assisted in cooling inflation from its peak last year. However, this move has come at the cost of affecting investment prices and causing damage to certain sectors of the economy.
The Fed initiated its latest meeting on interest rates on Tuesday, with an official announcement scheduled for Wednesday. It is widely expected that the Fed will maintain the current rates. The attention will primarily be focused on the updated projections provided by Fed officials regarding future rate movements in the coming years.
Traders are divided on whether the Fed will raise rates again within this year, but there is a strong belief that rate cuts will begin next year. These cuts can act as a boost to financial markets, invigorating various investment opportunities.
Joe Davis, Chief Global Economist and Head of Vanguard’s Investment Strategy Group, believes that achieving a soft landing where inflation returns to the Fed’s 2% target without triggering a painful recession is still possible but not probable.
The manufacturing and housing industries have already felt the impact of high interest rates. Recent data reveals that homebuilders started construction on fewer new homes in August than economists had anticipated. The decrease of 11.3% compared to July’s level was significantly worse than the forecasted decrease of 0.8%. However, building permits, which provide an indication of future activity, surpassed expectations.
In energy trading, benchmark U.S. crude experienced a slight drop of 10 cents to $91.10 per barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it had fallen by 28 cents to $91.20. This year, it has seen an overall increase of approximately 13% due to the reduction in oil production by oil-producing nations. The international standard, Brent crude, declined by 36 cents to $93.98 per barrel.
Regarding currency trading, the U.S. dollar strengthened against the Japanese yen, rising to 147.86 yen from 147.81 yen.
Contributed to this report.