Asia – Pacific Markets Trade Lower as Investors Keen on Fed Meeting

Asia-Pacific lost momentum on Monday as major indexes pared some of their gains while others struggled to advance. Investors are looking ahead to this week’s Federal Reserve meeting stateside.

Australian shares wavered as the benchmark ASX 200 finished up 0.09% at 6,773.00. The energy sector gained 0.79% while the materials sector slipped 0.61%. The heavily-weighted financials subindex rose 0.26%.

Japanese markets rose, where the Nikkei 225 notched up a 0.17% gain to 29,766.97 while the Topix index added 0.91% to 1,968.73.

Tech giant Rakuten jumped 24.1% after the company said Friday that it will issue new shares to raise $2.2 billion in capital to compete with its U.S. rivals. Japan Post is expected to take a 8.3% stake in Rakuten, while China’s Tencent will take 3.6% and U.S. retail giant Walmart takes a 0.9% stake.

In South Korea, the Kospi slipped 0.28% to 3,045.71 while Hong Kong’s Hang Seng index rose 0.12% in late-afternoon trade.

Chinese mainland shares struggled for gains: The Shanghai composite fell 0.96% to 3,419.95 while the Shenzhen component declined 2.71% to 13,520.07.

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A year since the coronavirus pandemic hit, China’s young people are still finding it hard to land jobs, according to data from the National Bureau of Statistics. The unemployment rate for those aged between 16 and 24 was significantly higher than the national urban jobless rate.

Indian shares also declined — the Nifty 50 was down 1.77% and the Sensex fell 1.75% in afternoon trade.

In Singapore, the Straits Times index rose 0.17% as of 3:32 p.m. local time. Shares of Singapore Airlines jumped 5.09% following reports that the city-state is in talks to set up an air travel bubble with Australia.

Fed Meeting

The Federal Open Market Committee is due to meet on March 16 and 17 and some analysts expect the U.S. central bank to revise up its GDP forecast, following a $1.9 trillion fiscal stimulus package that will send direct payments of up to $1,400 to most Americans.

“Some FOMC members might think rates will have to move higher sooner than they anticipated last December,” analysts at ANZ Research wrote in a morning note.

“For the Fed, the robust recovery and any shift in momentum in the dot plot profile will raise communication challenges about how long rates will stay low,” the analysts said.

Every quarter, members of the FOMC forecast where interest rates will go in the short, medium and long term. These projections are represented visually in charts and are called a dot plot.

Fed Chair Jerome Powell “is likely to tie the path of rates to a comprehensive economic improvement whilst stressing tolerance for a modest inflation overshoot,′ the ANZ analysts added.

Asian Markets Currencies and oil

In the Asia currency market, the U.S. dollar traded up 0.17% at 91.836 against a basket of its peers, climbing from an earlier level around 91.540.

The Japanese yen weakened to the 109 level, trading at 109.15 against the greenback compared to an earlier high around 108.90. Meanwhile, the Australian dollars changed hands at $0.7737, slipping from a previous level around $0.7775.

Oil prices rose Monday during Asia trading hours on the back of growing optimism around demand recovery. On the supply side, OPEC and its oil-producing allies this month said it would keep production largely steady through April.

U.S. crude was up 0.84% at $66.16 per barrel while global benchmark Brent added 0.88% to $69.83.