Asian stocks drop, Kospi hits 7-month low ahead of the Fed

• Asian stocks are on the back foot, courtesy of renewed trade tensions.
• South Korea’s Kospi has hit lowest since January, shares in Samsung Electronics slide 2.69%.
• Federal Reserve is expected to cut rates by 25 basis points.

Asian stocks are trading in the red at press time on renewed trade tensions ahead of the Federal Open Market Committee (FOMC) rate decision.

South Korea’s Kospi is currently trading at 2016, representing a 1% drop on the day. The index hit a low of 2011 earlier today, a level last seen on Jan. 4. Samsung Electronics, the index heavyweight, fell 2.6% on dismal second-quarter results.

Meanwhile, Japan’s Nikkei is also down 230 points or 1% and the Shanghai Composite is reporting a 0.73% or 22 point drop.

Wall Street painted red in the overnight trade with the S&P 500 index shedding 0.26% on dampened expectations for an end of the US-China trade war.

U.S. President Donald Trump tweeted Tuesday that China is not keeping its promise of buying more US agricultural products, forcing markets to price out the already low prospects of the two sides reaching a deal during the ongoing trade talks in Shanghai.

Focus on the Fed

Trade tensions are indeed negative for equities. Even so, investors may pour money into riskier assets if the US Federal Reserve (Fed) cut rates by 25 basis points as expected later today and keeps the door open for another rate cut before the year-end.

The equities, however, may come under pressure if the Fed adopts a neutral stance, forcing markets to scale back expectations of aggressive easing over the near term.