Asia-Pacific markets trade mixed ahead of Fed meeting; Rakuten up 18%

Signage for the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), is displayed outside the bourse in Tokyo, Japan, on Friday, Oct. 2, 2020.

Akio Kon | Bloomberg via Getty Images

SINGAPORE — Asia-Pacific markets traded mixed on Monday ahead of this week’s Federal Reserve meeting stateside.

Australian shares reversed earlier losses as the benchmark ASX 200 climbed 0.31%. The energy sector gained 1.18% while the materials sector erased some of its losses but still traded down 0.36%. The heavily-weighted financials subindex rose 0.68%.

Japanese markets rose, where the Nikkei 225 notched up a 0.36% gain while the Topix index added 0.69%.

Tech giant Rakuten jumped 18% after the company said Friday that it will issue new shares to raise $2.2 billion in capital to compete with its U.S. rivals. Japan Post is expected to take a 8.3% stake in Rakuten, while China’s Tencent will take 3.6% and U.S. retail giant Walmart takes a 0.9% stake.

In South Korea, the Kospi wavered between gains and losses — the benchmark index inched up 0.09%. Elsewhere, Hong Kong’s Hang Seng index rose 0.94%.

Chinese mainland shares struggled for gains: The Shanghai composite fell 0.21% while the Shenzhen component declined 1.51%.

Fed meeting

The Federal Open Market Committee is due to meet on March 16 and 17 and some analysts expect the U.S. central bank to revise up its GDP forecast, following a $1.9 trillion fiscal stimulus package that will send direct payments of up to $1,400 to most Americans.

“Some FOMC members might think rates will have to move higher sooner than they anticipated last December,” analysts at ANZ Research wrote in a morning note.

“For the Fed, the robust recovery and any shift in momentum in the dot plot profile will raise communication challenges about how long rates will stay low,” the analysts said.

Every quarter, members of the FOMC forecast where interest rates will go in the short, medium and long term. These projections are represented visually in charts and are called a dot plot.

Fed Chair Jerome Powell “is likely to tie the path of rates to a comprehensive economic improvement whilst stressing tolerance for a modest inflation overshoot,’ the ANZ analysts added.

Currencies and oil

In the currency market, the U.S. dollar traded fractionally lower at 91.615 against a basket of its peers, slipping from levels above 92.00 last week.

The Japanese yen weakened to the 109 level, trading at 109.10 against the greenback compared to an earlier high around 108.90. Meanwhile, the Australian dollars changed hands at $0.7750, slipping from a previous level around $0.7775.

Oil prices rose Monday during Asian trading hours on the back of growing optimism around demand recovery. On the supply side, OPEC and its oil-producing allies this month said it would keep production largely steady through April.

U.S. crude was up 0.9% at $66.20 per barrel while global benchmark Brent added 0.79% to $69.77.


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