Asian shares declined in Wednesday afternoon trade ahead of the U.S. Federal Reserve’s interest rate decision, set to be announced later stateside.
The Nikkei 225 in Japan slipped 0.41 percent in afternoon trade while the Topix index was just fractionally higher. An earlier data release on Wednesday showed Japanese retail sales in September surged 9.1 percent as compared to a year earlier, above expectations of a 6.9 percent increase from a Reuters poll. The jump in retail sales came ahead of a tax hike that went into effect on October 1.
South Korea’s Kospi traded down 0.72 percent as shares of Samsung Electronics fell more than 1 percent ahead of the industry heavyweight’s earnings release.
Mainland Chinese shares declined by the afternoon, with the Shanghai composite slipping 0.44 percent and the Shenzhen component shedding 0.8 percent. The Shenzhen composite also fell 0.952 percent. Hong Kong’s Hang Seng index dipped 0.26 percent.
Meanwhile, Australian shares declined as the S&P/ASX 200 slipped 0.78 percent. Data from the Australian Bureau of Statistics showed Wednesday that the consumer price index for the September quarter rose 0.5%, as compared to a 0.6 percent increase in the previous quarter.
Overall, the MSCI Asia ex-Japan index traded 0.37 percent lower.
The Fed is largely expected to slash interest rates by 25 basis points later this week. That would mark its third rate cut for this year.
Ahead of the Fed decision, the U.S. dollar index which tracks the greenback against a basket of its peers was last at 97.704 after scaling highs above 97.8 yesterday.
“With Fed fund futures showing a 94 percent chance of a cut, the performance of the dollar confirms that investors expect this to be the central bank’s last move of the year,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in an overnight note.
Developments on the U.S.-China trade front will also be monitored. Reuters reported Tuesday that the phase one trade deal may not be signed at a November summit in Chile. The report, however, cited a U.S. administration official who said: “If it’s not signed in Chile, that doesn’t mean that it falls apart. It just means that it’s not ready.”
“We don’t know for sure even whether they’re going to remove tariffs from China or just maybe just defer some of the tariffs that’ve been imposed. And China’s perhaps just going to buy the stuff they were gonna buy anyway,” Rob Carnell, chief economist and Asia-Pacific head of research at ING, told CNBC’s “Squawk Box” on Wednesday.
Overnight on Wall Street, the S&P 500 touched a fresh record high before ending the session 0.1 percent lower at 3,036.89. Meanwhile, the Dow Jones Industrial Average closed 19.30 points lower at 27,071.42 while the Nasdaq Composite shed 0.6 percent to end its trading day at 8,276.85.
The Japanese yen traded at 108.84 against the dollar after strengthening from levels above 108.9 yesterday. The Australian dollar was at $0.686 after rising from levels around $0.684 in the previous session.
Oil prices were lower in the afternoon of Asian trading hours. The international benchmark Brent crude futures contract was 0.34 percent lower at $61.38 per barrel. U.S. crude futures slipped 0.52 percent to $55.25 per barrel.
Source: Reuters
