Asian equities off to a slow start

Markets exercising caution ahead of FOMC

Wall Street had a sedate day as it moved into wait-and-see mode ahead of the FOMC. Earnings weighed slightly on the Nasdaq, which finished 0.34% lower, but the S&P 500 and Dow Jones finished the day unchanged. Alphabet’s aftermarket rally appears to have shifted sentiments slightly, with Nasdaq and S&P futures rising modestly, which seems to have given Asia a slightly positive bias in early trade.

The Nikkei 225 has climbed 0.31% after the yen weakened markedly overnight, while the Kospi has retreated by 0.70%. Mainland China’s Shanghai Composite and CSI 300 have advanced 0.15%, with the Hang Seng also 0.15% higher.

Regionally, Singapore has crept 0.15% higher, while Taipei and Kuala Lumpur have retreated by 0.30%. Jakarta and Bangkok are unchanged, with Manila rising 0.60%.

Australian markets have rallied after weak inflation data left markets pricing a lower for much longer RBA, and with a weaker Australian dollar boosting exporters. The ASX 200 and All Ordinaries have climbed 0.40%.

Today’s mixed price action reflects pre-FOMC caution and a reshuffling of positions and risk exposure ahead of it. I expect that tone to dominate the session and early European trading where the data calendar is light today.

Apple and Facebook are the two heavyweights in the earnings ring this evening. Apple should surpass expectations boosted by their new iPhone demand. Facebook will also have sold an ocean of ads but may have cloudier future guidance after Apple’s no tracking IOS release, and ongoing litigation and regulatory threats.

Looking ahead, the tier-1 data releases continue apace post-FOMC, with US GDP and Initial Jobless Claims tomorrow, followed by Personal Income and Expenditure on Friday. Japan has Preliminary Industrial Production tomorrow, followed by the Jibun PMI Friday. Germany releases Unemployment tomorrow, and finally, China releases official Manufacturing and Non-Manufacturing PMIs on Friday. Markets will have plenty to get their teeth into post-FOMC, but today’s session will likely see sedate range-trading ahead of the meeting.

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