Thursday, December 8, 2022

Asian shares rise on bets Fed may stay cautious

Asian shares rise on bets Fed may stay cautious

TOKYO - Asian shares rose on Tuesday, following Wall Street's lead, as investors positioned for the possibility that weaker-than-expected US data will prompt the Federal Reserve to leave its options open this week on the timing of a future rate hike.

Crude oil remained under pressure from a global supply glut, after US crude CLc1 lost as much as 4 percent in the previous session to hit a six-year low. It was last down about 0.3 percent at $43.75 a barrel.

The Federal Open Market Committee is scheduled to begin its two-day policy meeting later on Tuesday, and many analysts had expected the central bank to drop the word "patient" from its formal statement on the timing of its first interest rate increase since 2006. Economists polled by Reuters split almost evenly on whether a rate increase will come in June or later in the year.

But downbeat data on US manufacturing, industrial output and housing on Monday offered the Fed a reason to toe a cautious line on policy.

"We expect the Fed to drop the word 'patient' but at the same time it will say its policy will depend on economic data to keep its hand free so it can raise rates when it wants, whether it is June or September," said Shuji Shirota, the head of macro economics strategy at HSBC Securities in Tokyo.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.7 percent, after all three major US stock indexes posted gains of over 1 percent on Monday.

Chinese shares .SSEC rose to near 7-year highs, extending gains on hopes that the Chinese government will loosen policy to bolster its slowing economy.

Australian shares .AXJO rallied 1 percent after the Reserve Bank of Australia (RBA) left the door wide open for another interest rate cut. Minutes of its March policy meeting showed the central bank believed a pause this month was prudent following an easing in February.

Japan's Nikkei stock average .N225 was up 0.9 percent by the morning close, marking a fresh 15-year intraday high ahead of the Bank of Japan's policy decision announced during the market's midday break.

As expected, the BOJ maintained its massive stimulus and its optimistic assessment of the economy, signaling that the country is on course to emerge from recession without additional monetary loosening.

BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the policy decision.

Against its Japanese counterpart, the dollar was slightly higher on the day at 121.45 JPY=, not far from a nearly eight-year high of 122.04 logged one week ago.

The euro was nearly flat at $1.0570 EUR=, well off Monday's 12-year low of $1.0457.

The dollar index was up about 0.1 percent on the day at 99.692 .DXY, moving back toward last week's 12-year high above 100.00.

The dollar's recent strength has weighed on dollar-denominated commodities. Spot gold XAU= edged up about 0.1 percent to $1,155.95 an ounce, but hovered close to its lowest in over three months as traders awaited the Fed meeting outcome. - Reuters