Indian Morning Briefing : Asian Markets Lower Ahead of Fed Rate Decision

DJIA         31761.54  -228.50  -0.71% 
Nasdaq       11562.57  -220.09  -1.87% 
S&P 500       3921.05   -45.79  -1.15% 
FTSE 100      7306.28    -0.02   0.00% 
Nikkei Stock 27681.36    26.15   0.09% 
Hang Seng    20657.33  -248.55  -1.19% 
Kospi         2400.08   -12.88  -0.53% 
SGX Nifty*   16472.50    -7     -0.04% 
*August contract 
USD/JPY  137.00-01   +0.05% 
Range    137.13   136.81 
EUR/USD  1.0144-47   +0.27% 
Range   1.0149   1.0116 
CBOT Wheat Sept $8.036 per bushel 
Spot Gold    $1,717.59/oz   0.1% 
Nymex Crude (NY) $94.96   -$1.74 

U.S. stock indexes ended lower as a mixed set of earnings reports traced an unsteady path forward for markets ahead of a critical Federal Reserve meeting this week.

Stocks opened in the red, with losses building as the day progressed. The S&P 500 closed Tuesday lower by 45.79 points, or 1.2%, at 3921.05. The tech-focused Nasdaq Composite declined 220.09, or 1.9%, to 11562.57, and the Dow Jones Industrial Average shed 228.5, or 0.7%, to finish at 31761.54.


Japan’s Nikkei Stock Average was down 0.2% at 27605.92, dragged by falls in auto and machinery stocks, amid caution over earnings and the economic outlook. Honda Motor slipped 1.2% and Fanuc dropped 1.5%. Canon fell 3.3% after its 2Q net profit missed the consensus estimate. Capcom declined 5.2% after its 1Q net profit dropped 48% year-on-year. Investors were focusing on quarterly earnings and the U.S. central bank’s interest rate decision due later in the day.

South Korea’s benchmark Kospi fell 0.4% to 2404.24 in early trade, dragged by losses in chemical and energy stocks. The International Monetary Fund’s cut to its growth outlook for South Korea was weighing on sentiment. Investors were also cautious ahead of the U.S. Federal Reserve’s policy decision. USD/KRW gained 0.3% to 1,311.00 with the Fed widely expected to raise its federal funds rate by 0.75 percentage point again. Posco Chemical and Hansol Chemical fell 3.4% and 2.7%, respectively. LG Energy Solution dropped 1.9% as its IPO lock-up period expired. Memory-chip SK Hynix rose 0.5% after 2Q earnings.

Hong Kong’s Hang Seng Index was down 0.9% to 20714.85 in early trade amid weakness in technology stocks. The Hang Seng Tech Index declined 1.1% to 4548.11, likely tracking a weak performance in the U.S. ADRs market, KGI Securities analysts said in a note. Among technology stocks, Alibaba Group lost 3.3%. while fell 1.2%. Other decliners include Country Garden Holdings, which slumped 10% after announcing a share-placement plan. Gainers include PetroChina, which added 0.8%.

Chinese shares were broadly lower in early trade, reversing Tuesday’s gains. A-shares may come under further downward pressure from worsening U.S. economic data and monetary tightening by global central banks, Shanxi Securities said in a note. Lithium producers were lower, with Tianqi Lithium and Ganfeng Lithium both down more than 2%. EV-battery maker CATL dropped 0.9% and auto maker BYD weakened 0.7%. Software companies were among the gainers, including Yonyou Network, up 1.2%, and Hundsun Technologies, which gained 1.4%. The Shanghai Composite Index declined 0.2% to 3270.85, the Shenzhen Composite Index dropped 0.1% and the ChiNext Price Index was flat.


Asian currencies were mixed against the U.S. dollar and may weaken ahead of the FOMC interest-rate decision. The Fed is widely expected to raise the fed funds rate by 75bps. Its message about how much tightening may follow, how quickly and for how long still poses challenges to risk assets that investors are seemingly unwilling to leave on the table ahead of the meeting, said ING economists in a research report. USD/KRW rose 0.2% to 1,314.42 while USD/SGD was little changed at 1.3893 and USD/TWD edged 0.1% lower to 29.96.


Gold prices ticked higher in early Asian trade amid persisting concerns about the global economy, after inching lower overnight on a stronger USD. As investors continue to eye signs of possible recession and await the Fed decision, ANZ reckons the precious metal will be supported by safe-haven demand in the near term. ANZ analyst note drivers including recent weak economic data from the U.S. signaling a sharp fall in consumer confidence. Oanda puts support for gold at $1,680/oz and resistance at $1,745/oz. Spot gold was 0.1% higher at $1,717.59/oz.


Oil prices were mixed in early Asian trade, after settling lower overnight on recession fears. “With the market backdrop generally cautious amid the threat of recession due to aggressive front-loaded rate hikes, traders seem to need little justification to trim longs position into rallies ahead of another expected jumbo Fed hike, effectively keeping prices capped for now,” SPI Asset Management’s managing partner Stephen Innes said in a note. Front-month WTI crude-oil futures rose 0.2% to $95.14/bbl and Brent was 0.1% lower at $104.134/bbl.

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LVMH Buoyed by Big Spenders in Europe and U.S. 

(END) Dow Jones Newswires

07-26-22 2315ET

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