- Shares in Asia portray the typical pre-Fed sluggish mood.
- No progress in US fiscal package talks, virus woes keep the risk-tone heavy.
- China blue-chips regains strength, Nikkei 225 bears the burden of Fitch’s outlook downgrade.
- ASX 200 stays depressed following downbeat Aussie CPI, warning by Queensland.
Asian equities struggle for a firm direction while repeating the pre-Fed trading lull ahead of Wednesday’s European session. US dollar remains pressured amid American policymakers’ failures to agree on phase 4 of the aid package. The greenback also ignores the Federal Reserve’s (Fed) stretching of previous stimulus measures’ expiries to December 31, 2020. The move could have taken clues from rising coronavirus (COVID-19) numbers while paying a little heed to the vaccine hopes, rekindled early in Asia by US President Donald Trump.
Elsewhere, Nikkei came out with the news suggesting the Japanese government’s plan to cut economic forecasts for 2020/21 read GDP. Following that, Fitch downgraded the Asian major’s investment outlook to negative but kept the A+ grade intact. As a result, Nikkei 225 drops 1.21% to 22,382 while writing. On a broader concern, the MSCI index of Asia-Pacific shares outside Japan remains mostly unchanged, up 0.02% on a day, as taking rounds to 700.00 by the press time.
Australia’s ASX 200 drops 0.15% to 6,010 after the second-quarter Aussie Consumer Price Index (CPI) and RBA Trimmed Mean CPI flashed dismal figures. Also weighing on the risk-sentiment could be an announcement from Queensland that bars entries from Victoria starting from 01:00 AM on Saturday. New Zealand’s NZX 50 bucks the trend with minor gains but South Korea’s KOSPI and Indonesia’s IDX Composite staying in the red with less than 0.20% loss. The same could be applied to India’s BSE Sensex as Bloomberg’s analysis defy the recently upbeat trade numbers.
Further, Chinese stocks remain on the front foot with the hope that the dragon nation will even overcome virus wave 2.0 as it won against the first hit. Also favoring the blues chips is the government’s readiness to pump the economy and keep fighting against the globe for Hong Kong’s security law.
Talking about the risk gauges from the US, S&P 500 Futures reverse the early-day gains with 0.25% losses whereas the US 10-year Treasury yields remain on the back foot around 0.58% as we write.
Given the existence of the Fed’s meeting on the calendar, nothing will entertain the traders and the sluggish moves could extend before the event. However, geopolitical headlines may keep the market alive with small ticks.
Read: Fed Preview: Warming up to controlling the yield curve, nudging lawmakers, keeping markets happy
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