Singapore - Asian stocks were mixed on
Wednesday, moderating after earlier strong gains on positive
global earnings and manufacturing data, while expectations that
the US Federal Reserve will signal a June rate increase later
in the session lifted the dollar.
Futures traders were on Wednesday pricing in a 63 percent
chance of a June rate hike, according to the CME Group’s
FedWatch Tool, which was predicting an almost 72 percent chance
a week ago and a 59 percent chance a month ago.
European markets are set for a muted start, with financial
spreadbetters expecting Britain's FTSE to open down 0.1
percent, and both Germany's DAX and France's CAC 40
to begin the day flat, after all posted gains on
Tuesday.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.1 percent on Wednesday, after
touching a near two-year high earlier in the day.
The MSCI World index surpassed Tuesday's
record to hit a new high on Wednesday.
Hung Tran, executive managing director at the Institute of
International Finance, said investors were currently struggling
to price in outcomes amid a volatile political environment.
But "the very benign investment backdrop - supported by a
cyclical upturn in the global economy, central bank liquidity
and a persistent savings glut - has... helped cushion markets
from political shocks," Tran wrote in a report.
Hong Kong and South Korean markets are closed for the
Buddha's birthday holiday, and Japan is shut from Wednesday
until Friday for Golden Week.
Taiwan gained 0.1 percent. Singapore and
Thailand were also higher, although Chinese shares
pulled back almost 0.5 percent.
Australian shares dropped 1 percent, failing to find
new catalysts to lift above a two-year high hit on Monday.
The pan-European Stoxx index jumped to its highest
level since August 2015 on Tuesday.
Overnight, Wall Street closed higher, although Nasdaq
futures fell alongside Apple shares in extended trading,
after the company reported a surprise fall in iPhone sales for
the second quarter.
Net income still beat analysts' estimates.
Markets are awaiting word from the Fed, which concludes its
two-day meeting later on Wednesday. With the central bank
largely expected to hold interest rates steady, the focus will
be on language about future increases.
Since the last meeting, economic data has been mixed, with
the economy growing at a sluggish 0.7 percent annual pace in the
first quarter as consumer spending almost stalled.
A decline in US new vehicle sales for April, following a
disappointing March is also prompting worries that the industry,
which has seen a nearly uninterrupted boom since 2010, may be on
a downward swing.
But a surge in business investment and the fastest wage
growth in a decade suggest activity will regain momentum as the
year progresses.
The weak US auto sales figures could make market
participants wary of actively buying the dollar against the yen
for now, said Satoshi Okagawa, senior global markets analyst for
Sumitomo Mitsui Banking Corporation in Singapore.
"Concerns about geopolitical risks such as North Korea had
weighed on the dollar against the yen recently... But the focus
is shifting to whether the [strength] of US economic
fundamentals is for real," he said.
"There is more data coming up including the jobs data, so
those need to be watched closely," Okagawa said, referring to
the US nonfarm payrolls report due on Friday.
The dollar was little changed at 111.995 yen on
Wednesday. It touched a six-week high on Tuesday but fell back
to close 0.2 percent higher.
The dollar index, which tracks the greenback against
a basket of trade-weighted peers, rose 0.1 percent to 99.055.
The euro was marginally lower at $1.0923,
following Tuesday's 0.3 percent gain.
Sterling weakened almost 0.4 percent to $1.2895,
surrendering most of Tuesday's 0.4 percent gain.
Eurozone unemployment remained at 9.5 percent in March, the
lowest level since April 2009, while manufacturing growth for
April was at or near six-year highs in France and Germany, and
rose to a three-year peak in the UK, data showed overnight.
That followed figures from Asian economies including
Indonesia, Malaysia, India and Japan that all showed faster
manufacturing growth in April. While growth in China eased more
than expected, the world's second-largest economy nevertheless
avoided a sharp loss of momentum.
In commodities markets, crude advanced on a drawdown in U.S.
inventories after a sharp fall on Tuesday on technical selling
in a market that was already worried about oversupply and
concerned that OPEC members' commitment to a deal that curbed
production may be slipping.
While output from all 13 members of the Organization of
Petroleum Exporting Countries together fell in April from March,
supply from 11 members with production targets under the deal
rose, in the first increase since the pact took effect at the
start of the year.
Global benchmark Brent added 0.9 percent to $50.92
a barrel, after falling 2.1 percent overnight to its lowest
closing price this year.
US crude recovered 0.7 percent to $48.01, after
sliding to its lowest closing price since March 21 on Tuesday.
Gold slid 0.2 percent to $1 254.22 an ounce on the
stronger dollar.