Indian Morning Briefing: Asian Markets Mixed Ahead of Fed, ECB Policy Meetings

DJIA             33717.09   -260.99    -0.77% 
Nasdaq           11393.81   -227.90    -1.96% 
S&P 500           4017.77    -52.79    -1.30% 
FTSE 100          7784.87     19.72     0.25% 
Nikkei Stock     27403.99    -29.41    -0.11% 
Hang Seng        22030.10    -39.63    -0.18% 
Kospi             2440.67     -9.80    -0.40% 
SGX Nifty*       17779.00      74.0     0.42% 
*Feb contract 
USD/JPY     130.13-14    -0.24% 
Range       130.53   130.07 
EUR/USD     1.0850-53    0.00% 
Range       1.0869   1.0847 
CBOT Wheat March $7.524 per bushel 
Spot Gold  $1,926.18/oz 0.2% 
Nymex Crude (NY) $77.83  -$1.85 

U.S. stocks fell, with investors growing cautious at the start of a bumper week of central-bank meetings and corporate earnings.

The S&P 500 was down 1.3%, while the Dow Jones Industrial Average fell about 0.8%. The Nasdaq Composite declined nearly 2%.

The Federal Reserve, under Chairman Jerome Powell, is determined to tame inflation, and many believe the Fed is unlikely to quickly begin lowering interest rates as it has done in the past. Some investors worry that sustained high rates could drag the economy into recession.

“The market has had a flying couple of weeks. But as we get closer to the Fed meeting, cautiousness is something that is certainly going to creep in,” said Seema Shah, chief global strategist at Principal Asset Management. “We will likely see Powell re-emphasizing that they are not at the end yet.”


Japanese stocks were higher in morning trade, led by gains in utility and auto stocks, thanks to recent falls in energy prices and a weaker yen. USD/JPY was at 130.38, up from 129.64 as of Monday’s Tokyo stock-market close. Earnings were in focus, with Daiichi Sankyo, Hoya Corp. and Fujitsu Ltd. scheduled to announce their results later in the day. The Nikkei Stock Average was up 0.1% at 27470.22.

South Korea’s benchmark Kospi edged 0.2% lower to 2445.70 in early trade, as tech and auto stocks retreated. The country’s industrial output decline in December and weak 4Q earnings of Samsung Electronics weighed on sentiment. Foreign and institutional investors were net sellers. Trading was thin and lackluster on investor caution ahead of the policy meetings by the U.S. Federal Reserve and the European Central Bank this week.

Hong Kong stocks were slightly higher in morning trade, continuing to take a more muted tone in the wake of a blistering rally late last week when the market resumed trading after the Lunar New Year holiday period. The benchmark Hang Seng Index rose 0.35% to 22147.88. Electronics makers led gains. The broader China equity universe is likely to deliver solid gains in 1Q, thanks to improving investor sentiment for the region, as well as its better risk-reward profile over many other stock markets such as the U.S., Galaxy Securities analysts said in a note. An upcoming positive catalyst could be 1Q corporate earnings, which are likely to prove very strong as China’s Covid reopening boosts economic activities and business growth, the analysts added.

Chinese shares opened lower in morning trade, taking their cue from Wall Street declines overnight, as the recent rally sparked by hopes of a Chinese economic recovery in 2023 takes a pause. The market mood could be shaped by fresh economic data out this morning, which showed China’s PMI gauges for services, manufacturing and construction rebounding in January, signaling that the country’s rapid reopening has boosted domestic growth. Consumption and software companies were weighing on the market early on. Insurance companies and auto makers were outperforming. Both the Shenzhen Composite Index and the ChiNext Price Index were down 0.2%.


Asian currencies consolidated against the USD in early Asian trade ahead of the FOMC’s two-day meeting that begins later today. At this time, it seems unlikely that the Fed would want to appear dovish, said Chris Weston, head of Research at Pepperstone, in an email. Hence, with risks tilted toward a hawkish Fed in a market where leverage funds are short USD, the bias is slightly skewed to USD’s upside, Weston added. USD/KRW fell 0.2% to 1,228.95 while USD/SGD was little changed at 1.3138 and AUD/USD was down 0.1% at 0.7057.


Gold prices inched higher in the Asian morning session, as the precious metal extended its recent muted trading pattern. The safe-haven commodity has sustained a strong bullish run in recent weeks on the back of global recession worries and continued geopolitical uncertainties. But analysts at Galaxy Futures said recession concerns may be easing, as recent economic data from the U.S. and Europe have proved more resilient than feared. This could raise investors’ risk appetite and weigh on demand for assets like gold. Spot gold was 0.2% higher at $1,926.18/oz.


Oil gained in early Asian trade, recovering from recent declines, as strong Russian oil exports relieved some supply shortage concerns. Analysts at Yongan Futures remained positive on the near-term price outlook for oil. They pointed to lower-than-usual inventory levels in Europe and the U.S, which could suggest more buying activities ahead. China’s solid travel traffic during the past week’s holiday period further brightens oil’s demand outlook, as the country is likely to stage a strong economic recovery after its post-reopening infection surge, the analysts added. Front-month WTI crude oil futures were 0.3% higher at $78.11/bbl.

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(END) Dow Jones Newswires

January 30, 2023 22:15 ET (03:15 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.

Read More: Indian Morning Briefing: Asian Markets Mixed Ahead of Fed, ECB Policy Meetings

2023-01-31 03:15:00

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