Asian stocks rise as traders await Fed decision
Asian stocks rose before a Federal Reserve policy decision, with traders still split on the size of an anticipated interest-rate cut.
Japanese shares led regional gains as the yen’s slide on Tuesday boosted the outlook for the nation’s exporters. The dollar bounced in New York following stronger-than-expected retail-sales data. Hong Kong is shut for a holiday, while Chinese stocks listed on mainland markets will resume trading after a break.
Market-implied odds now put the chance of a half-point Fed cut Wednesday at just over 50%, with the uncertainty over the size of the move helping to boost risk assets including Bitcoin and oil. Treasuries were little changed in Asia after edging lower on Tuesday.
“With the Fed meeting holding the potential to significantly boost volatility, there are clearly enough reasons for would-be buyers to sit on their hands,” said Chris Weston, head of research at Pepperstone Group. “While shorts may look to cover, the prospect of a day where we see a grind lower through trade on lighter volumes seems highly plausible,” he said.
For several market observers, perhaps the most-important aspect of what happens may be the investor reaction. Could a 25 basis-point reduction leave traders worried the Fed is behind the curve? Could a 50 basis-point move spook markets that the Fed must know the economy is in dire shape? Or will investors be reassured that, whatever the Fed does, Chair Jerome Powell is on top of the situation?
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