SYDNEY : Asian stocks were subdued on Wednesday as a lack of new stimulus steps from Beijing frustrated investors, who were also wondering just how hawkish the world’s most powerful central banker would chose to be later in the session.
Federal Reserve Chair Jerome Powell faces lawmakers in two days of testimony and is sure to be questioned on whether rateswill really rise again in July and peak in a 5.5 per cent-5.75 per cent range as projected.
Markets have their doubts and currently imply around a 78 per cent chance of a hike to 5.25-5.5 per cent next month, with that likely being the end of the entire tightening cycle.
“The focus is on whether the July meeting is truly “live” and if the Fed dot plot of two more hikes is a true base case depending on the data, or doom-mongering on inflation in an effort to ensure no premature easing in financial conditions,” said Tapas Strickland, head of market economics at NAB.
The uncertainty kept S&P 500 futures and Nasdaq futures flat after a slight dip overnight. EUROSTOXX 50 futures edged up 0.2 per cent and FTSE futures 0.1 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.8 per cent, with South Korea off 0.5 percent.
Japan’s Nikkei inched up 0.1 per cent as the market consolidates three months of hefty gains. A survey showed morale at big Japanese manufacturers edged up in June to stay in positive territory for a second straight month.
Chinese blue chips eased 0.5 per cent with investors still disappointed by the extent of Tuesday’s rate cuts, which also saw the yuan hit its lowest for the year.
Source: Reuter
