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Asia markets tread water ahead of Fed decision; dollar slips after Alabama election results

Asian markets were mixed in Wednesday trading as investors awaited the conclusion of the Federal Reserve’s two-day policy meeting and the dollar edged down following a projected Democrat win in Alabama.

Though the Nikkei 225 was lower by 0.56 percent, there were gains among some automakers and most financial stocks.

Energy-related names pulled back while tech shares were a mixed picture, with SoftBank off 0.78 percent and Sharp climbing 0.93 percent.

Across the Korean Strait, the benchmark Kospi index tacked on 0.54 percent as South Korean President Moon Jae-in began a four-day trip to China. North Korea’s weapons program and Seoul’s deployment of the THAAD missile defense system are expected to be on the agenda during the trip.

So-called “THAAD-related” stocks — the name given to South Korean shares that get hit when China retaliates against the country by cutting off tourism — gained on Wednesday: Lotte Shopping rose 1.01 percent, Amorepacific gained 1.61 percent and Korea Air Lines was up 5.97 percent.

Meanwhile, losses in blue-chip tech heavyweights were offset by gains seen in manufacturing and automobile names. Samsung Electronics fell 1.23 percent, SK Hynix shed 1.67 percent and Posco rose 0.9 percent.

In Sydney, the S&P/ASX 200 erased early gains to trade 0.03 percent below the flat line as energy names declined. Santos shed 1.08 percent and Oil Search lost 0.47 percent. Losses were also seen among utilities and gold miners.

Shares of shopping center company Westfield surged 13.76 percent after it accepted a $15.7 billion takeover bid from France’s Unibail-Rodamco. Shares of Scentre Group, which owns the group’s Australian assets and was spun out in 2014, rose 1.61 percent after surging some 4 percent in the previous session.

Hong Kong’s Hang Seng Index edged up by 0.28 percent while mainland markets were little changed. The Shanghai Composite was off 0.12 percent and the Shenzhen Composite 0.1 percent lower.

Most major U.S. indexes rose on Tuesday as optimism over tax reform mounted. The Dow Jones industrial average rose 118.77 points, or 0.49 percent, posting a record close of 24,504.80.

The existing version of the tax bill will include a 21 percent corporate tax rate, sources told CNBC. House and Senate Republicans had earlier passed separate version of the bill and are now hammering out a joint bill.

Markets awaited the conclusion of the Federal Reserve’s December policy meeting on Wednesday U.S. time. The Fed is expected by most market watchers to raise interest rates by a quarter point.

Investors are also watching the Fed for clues about how the central bank will process possible changes to the U.S. tax system going forward. Decisions from other central banks, including the Bank of England and European Central Bank, are also expected in the week.

Meanwhile, investors also took note of a special Senate election in Alabama, which Democrat Doug Jones has been projected to win. If confirmed, the development will take the Republican Party’s slim majority in the Senate down to 51 seats and could be a potential stumbling block as the GOP attempts to pass a tax reform bill.

The dollar index, which tracks the U.S. currency against a basket of six currencies, edged lower to trade at 93.933 at 12:00 p.m. HK/SIN after firming overnight. Against the yen, the greenback lost ground to trade at 113.27.

“A lot of positive news is priced in the dollar and currency is vulnerable to disappointment,” Giulia Specchia, an economist at ANZ, said in a morning note.

In currencies, the Australian dollar extended gains following a flurry of M&A news on Tuesday. The Aussie dollar traded at $0.7574 at 12:02 p.m. HK/SIN after climbing as high as $0.7580 in the previous session.

That move higher in the currency followed news of the Unibail-Rodamco acquisition of Westfield on Tuesday. Australian bank ANZ also said in the previous session that its life insurance business would be sold to Zurich Life.

Meanwhile, the New Zealand dollar traded at $0.6951 after touching a one-month high overnight. The currency was given a boost following the appointment of the Reserve Bank of New Zealand’s new governor earlier this week.

In commodities, oil prices pared some overnight losses on Wednesday after data showed U.S. crude stocks fell more than expected. Also of note, the U.S. Energy Information Administration said Tuesday it expects U.S. oil production to rise sharply next year, Reuters reported. Prices had risen earlier this week following the closure of Britain’s Forties Pipeline for repairs.

U.S. West Texas Intermediate edged up 0.65 percent to trade at $57.51 per barrel. Brent crude added 0.9 percent to trade at $63.92 after falling 2 percent in the previous session.

Shares of Toshiba were up 0.98 percent after the embattled Japanese company came to an agreement over a dispute with business partner Western Digital. The latter had earlier taken issue with Toshiba’s decision to sell its memory chip unit to a consortium led by Bain. The companies said in a joint statement they would proceed with future investments in their Yokkaichi joint venture.

Meanwhile, the founder of Chinese tech company LeEco has been included on a nationwide list of debt defaulters, China Daily reported. Jia Yueting had not paid around 465 million yuan ($70.2 million) owed to Ping An Securities, the newspaper said. The company once had its sights set on taking on Apple, but has since been plagued by a shortage in cash. Source: CNBC

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