TOKYO, June 13 2018 : Asian shares edged slightly lower today as investors looked to the Federal Reserve policy decision and any clues it might give on future rate hikes, shifting focus away from the historic U.S.-North Korea summit in Singapore.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.15 percent in early trade, giving up the slim gains they made following yesterday’s meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un.
Japan’s Nikkei .N225 eked out gains of 0.10 percent.
On Wall Street, the S&P 500 gained 0.17 percent, led by a continued rally in technology shares. The Nasdaq Composite .IXIC added 0.57 percent, to finish at record low of 7,703.
With the U.S.-North Korea summit out of the way, market focus is quickly shifting to the Fed’s two-day policy meeting ending on Wednesday.
“With a rate hike almost fully priced in, the focus is on how many times the Fed will raise rates this year and next and how much beyond the levels it considers as neutral to the economy, or what they call the longer-run rates,” said HSBC’s Shirota.
Projections from the Fed’s March meeting suggest a benchmark rate of 2.1 percent at end of 2018, based on the median forecast of central bank policymakers, which would mean three rate hikes in total this year.
In the currency market, the dollar was relatively well bid ahead of the Fed’s meeting.
The euro traded at $1.1744 EUR=, off last week’s high of $1.1840 touched on June 7 though it was underpinned by expectations that the European Central Bank may drop a hint of winding up its stimulus after its policy meeting tomorrow.
The dollar stood at 110.50 44 yen JPY=, near its highest levels in about three weeks.
Some emerging market currencies stayed under pressure on worries higher U.S. rates could prompt fund outflows from emerging markets to the United States.
The Mexican peso MXN=D2 hit a 16-month low of 20.724 peso to the dollar while the South African rand ZAR=D3 dropped to a six-month low of 13.345 per dollar, extending its decline, triggered by disappointing GDP data last week.
U.S. West Texas Intermediate crude futures traded at $65.83 per barrel.
Elsewhere, bitcoin fell to a 2-1/2-month low of $6,461 at Bitstamp exchange BTC=BTSP yesterday on mounting regulatory and security concerns after the weekend hacking of South Korean cryptocurrency exchange Coinrail. – Reuters