Asia Shares fade, Dollar on edge before Fed

Asian share markets faded from seven-year peaks on Wednesday while investors exited crowded positions in the U.S. dollar as the Federal Reserve wraps up a two-day policy meeting.

The broad retreat in the U.S. currency came as a string of soft data seemed to push back the day when the Fed might start lifting rates, and ignored a rise in Treasury yields.

Trading was thinner on Wednesday with Japanese markets on holiday and little in the way of major data out in Asian time.

That helped the dollar index .DXY to steady at 96.098 after touching the lowest since March 5. The euro stood at $1.0972 EUR= having stopped short of resistance at $1.1000.

The dollar fared better on the yen at 118.84 JPY= as Japan’s central bank is expected to reaffirm its massive stimulus campaign at a policy meeting on Thursday.

Talk of more aggressive policy easing in China has also put a bid under many regional stock markets, and helped Shanghai .SSEC recoup early losses to add 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 0.9 percent having touched their highest since early 2008 at one point.

Australian stocks .AXJO slid 1.6 percent after repeatedly shying away from a major psychological barrier at 6,000.

South Korean electronics giant Samsung (005930.KS) rose 1.5 percent after reporting its fattest profit in three quarters.

Financial spreadbetters expected Britain’s FTSE 100 .FTSE to open up as much as 0.3 percent, with Germany’s DAX .GDAXI adding 0.1 percent and France’s CAC 40 .FCHI 0.3 percent.

On Wall Street, the Dow .DJI had ended Tuesday with gains of 0.4 percent, while the S&P 500 .SPX rose 0.28 percent and the Nasdaq .IXIC dipped 0.1 percent.

Aiding the Dow was a 1.9 percent gain in IBM (IBM.N) shares after the company raised its quarterly dividend by 18 percent, the biggest increase in five years.

Apple (AAPL.O) hit a record high after posting stellar results, but still ended down 1.6 percent. Shares of Twitter (TWTR.N) dropped as much as 24 percent after its results disappointed, before closing with a loss of 18.2 percent.

The Fed’s latest policy statement will come just hours after data are expected to show the U.S. economy grew at a pedestrian 1 percent annualized pace in the first quarter, partly due to bad weather and a port strike. ECONUS

The Fed has so far played down the softness in the hope of a rebound in the second quarter, and there have been hints of a much-needed upturn in wages and inflation.

“Investors are approaching FOMC with the view it will bore as much as possible. The risk is that what is neutral to the Fed may be surprisingly upbeat to the market,” said analysts at Citi.

“We would not see this as a big near-term boost to the dollar and bond yields, but more a reminder that the Fed remains hopeful that data will improve sufficiently for a lift-off in September.”

Yields on 10-year U.S. Treasury bonds were near one-month highs at 2.010 percent on Wednesday US10YT=RR, having drifted up from 1.90 percent at the start of the week.

In oil markets, traders were unsure what to make of a surprise move by Saudi King Salman bin Abdulaziz to sack his younger half brother as crown prince and appoint his nephew as the new heir apparent.

Internal reshuffles in Saudi Arabia often move oil prices because stability in the world’s biggest oil exporting country is key to global supplies.

Brent crude LCOc1 was quoted 16 cents lower at $64.48 a barrel, while U.S. crude CLc1 fell 14 cents to $56.92.

Source: Reuters

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