Asian equities mixed ahead of FOMC

Asian markets in cautious mood

Asia Pacific markets are taking a cautious approach today, notably, as cyclical stocks underperformed in the US overnight and ahead of the FOMC decision tomorrow. On Wall Street, a weaker durable goods headline and expectations of impressive technology earnings this week saw a rotation into the Nasdaq, which powered 0.87% to a new record high. The more balanced S&P 500 rose just 0.18%, while the non-zoom-boom-heavy Dow Jones edged 0.18% lower.

With US index futures unchanged in Asian trading and thus, providing little direction other than to march on the spot, Asian markets have mostly edged lower in sympathy with the Dow Jones. A non-descript Bank of Japan meeting and Covid-19 worries sees the Nikkei 225 0.20% lower, while the Kospi has fallen 0.30%. In mainland China, the Shanghai Composite and CSI 300 have lost 0.40%, while Hong Kong is 0.15% lower.

Regionally, Singapore is 0.30% higher on local heavyweights’ earnings releases. Taiwan and Bangkok are unchanged, Kuala Lumpur is falling 0.60%, while Jakarta has risen by 0.15%. In Australia, local markets are weighed down by comments from iron ore heavyweight Vale, which said global iron ore supplies would increase in H2 while demand may soften. That offset multi-year highs in copper with the ASX 200 and All Ordinaries falling 0.35%.

Directionally, there is little to go on with today’s price action in Asia. If anything, it suggests investors are taking some exposure off the table ahead of the FOMC, and thus, we can expect a similarly slightly negative open in Europe.

Later in the day, the focus will shift to the US earnings session, with a who’s who of corporate heavyweights announcing Q1 results. Most attention, though with be on the technology titans Microsoft and Alphabet. Apart from the headline numbers, which should be spectacular, most attention will be focused on their growth outlooks and whether those expectations are reined in as major economies reopen.

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