Asian-Pacific market trades mixed as investors focus on Fed meeting

Asian-Pacific market trades

Asia-Pacific stock markets traded mixed as investors look ahead to this week’s Federal Reserve meeting stateside.

Australian shares regained some lost ground as the benchmark ASX 200 traded near flat. The power sector gained 0.77% while the materials sector was down 0.89%. The heavily-weighted financials subindex retraced losses to trade up 0.2%.

In Japan, the Nikkei 225 led to a 0.53% gain before trading close to the flatline and the Topix index rose 0.21%. South Korea’s Kospi dropped 0.31%.

The Federal Open Market Committee meeting is scheduled on March 16 and 17. The U.S. central bank is expected to revise up its GDP forecast, following a $1.9 trillion fiscal stimulus package.

While this week’s monetary policy decision will more than likely yield no immediate policy changes, it will take on additional weight in providing more commentary on the central bank’s thinking about the pace of the economic recovery.

In other words, Federal Reserve Chair Jerome Powell will be tasked with toeing the line between offering a more optimistic assessment of the trajectory of the economy, while also easing market fears that the recovery may lead to inflation overshoot.

“Some FOMC members might think rates will have to move higher sooner than they anticipated last December,” analysts at ANZ Research wrote in a morning note.

“For the Fed, the robust recovery and any shift in momentum in the dot plot profile will raise communication challenges about how long rates will stay low,” the analysts said.

Damon Harrison
Market Analyst, IPG Group