GLOBAL MARKETS-Asian stocks edge higher as investors await Fed statement

GLOBAL MARKETS-Asian stocks edge higher as investors await Fed statement

Reuters  | Sep 16, 2020 02:24

GLOBAL MARKETS-Asian stocks edge higher as investors await Fed statement

* MSCI Asia ex-Japan +0.4%

* Nikkei inches higher as Suga voted PM

* European share futures point to lower open

* Yen hits two-week high, dollar treads water

By Andrew Galbraith

SHANGHAI, Sept 16 (Reuters) - Most Asian shares rose on Wednesday, extending a rally driven by upbeat Chinese and U.S. economic data, but investors showed little appetite for big bets as they awaited the Federal Reserve's view on the economy at its policy meeting.

European bourses were set for a cautious start, with pan-region Euro Stoxx 50 futures STXEc1 down 0.15%, German DAX futures FDXc1 0.06% lower and FTSE futures FFIc1 down 0.64% in early trade.

Following robust industrial output and retail sales data from China and higher U.S. factory production investors are focusing on the Fed's policy statement due Wednesday, the first since Chair Jerome Powell announced an increased tolerance for higher inflation. risk is if we see no new developments since his Jackson Hole shoutout, this could have near-term pressure on yields ticking up, gold and precious metals complex lower, dollar higher and general risk-off in U.S. equities," said Kay Van-Petersen, global macro strategist at Saxo Capital Markets.

"If we do get a surprise on the accommodative side - we've gotten this a few times from smooth Jay (Powell) - then we could get the inverse of all that, including the next big structural break higher in gold."

The Fed is due to make its statement at 1800 GMT Wednesday, followed by a news conference from Powell.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 0.4% higher. Australian shares .AXJO gained 0.97% and Taiwan's tech-heavy board .TWII added 1.02%.

However, Chinese blue-chips .CSI300 pulled back 0.62% as investors booked profits and as healthcare firms dragged on concerns over vaccine safety. Nikkei .N225 added 0.09% as Yoshihide Suga was voted in as the country's first new prime minister in nearly eight years, and readied a "continuity cabinet". Fed meeting comes as U.S. lawmakers remain at an impasse over a new stimulus package amid lingering concerns about the recovery of the world's largest economy from the coronavirus pandemic.

"There is some expectation that with the U.S. Congress unwilling/unable to agree to a new fiscal package, monetary policy may need to step in to fill the void," NAB analyst Tapas Strickland said in a note. "Accordingly markets will be focused on any changes to forward guidance and to any balance sheet adjustments."

The Bank of Japan and the Bank of England announce their respective policy decisions on Thursday.

E-mini futures for the S&P 500 EScv1 were up 0.06% on Wednesday after U.S. stocks ended off their session highs, with the Dow industrials closing little changed.

The S&P 500 .SPX gained 0.5% while the tech-heavy Nasdaq Composite .IXIC rose 1.2%. retail sales figures from August will also be in focus on Wednesday.

Separately, the World Trade Organization found on Tuesday that the United States had breached global trading rules by imposing multi-billion dollar tariffs in President Donald Trump's trade war with China, a ruling that drew anger from Washington. the currency market, the yen touched a two-week high of 105.23 per dollar JPY= as traders bet on a more accommodative Fed, and was last at 105.31.

The euro EUR= was barely lower at $1.1844, and the dollar index =USD , which tracks the greenback against a basket of six major rivals, softened slightly to 93.070.

The yield on benchmark 10-year Treasury notes US10YT=RR was at 0.674%, from Tuesday's close of 0.679%.

In contrast to the muted activity elsewhere, oil prices jumped as a hurricane disrupted U.S. offshore oil and gas production and as U.S. stockpiles fell. benchmark Brent crude LCOc1 rose 1.43% to $41.11 per barrel and U.S. West Texas Intermediate crude CLc1 jumped 1.65% to $38.91 a barrel.

Spot gold XAU= gained 0.2% to $1,959.72 per ounce. GOL/

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