Asian stocks up as investors shrug off tech rout, eye Fed

Asian stocks up as investors shrug off tech rout, eye Fed

Traders are expecting a 100% chance of a rate increase according to CME's Fedwatch tool, so another 25-basis points hike seems a done deal, but whether the USA dollar moves higher or lower after the announcement on Wednesdaydepends on a couple of factors.

OANDA's Senior Market analysts Jeffrey Halley noted that "With the United Kingdom event risk successfully negotiated, it would appear the market is putting more emphasis on this week's FOMC (Federal Open Market Committee) rate hike", Halley also noted that he is 100% certain that the Feds will come through with the hike.

Central Banks are in focus this week, with the Federal Reserve expected to release its decision on interest rates later this week. In addition, the Fed's favorite gauge of price pressures, after stripping out food and energy components, declined to 1.5 percent in the 12 months through April from 1.8 percent in February.

The Standard & Poor's 500 index dipped 2.38 points, or 0.1 percent, to 2,429.39. This is so widely expected that likely the rate increase itself will do little for the U.S. dollar. The benchmark Jakarta Composite Index rose modestly at 0.03 percent, while the Indonesian rupiah appreciated slightly (0.02 percent) against the USA dollar (Bloomberg Dollar Index).

The Federal Open Market Committee (FOMC) is expected to hike its benchmark rate from 0.75-1% to 1-1.25%, after the conclusion of a two-meeting on Wednesday.

Economic data since the Fed's March meeting, when it opted to lift rates by a quarter percentage point, has shown the nation's unemployment rate falling four percentage points as the so-called slack in the labor market diminishes. Shares of Toshiba rose 4.49%. The metal had also touched a three-week low of $16.80 an ounce in the previous session.

The UK's FTSE 100 Index rallied 1 percent, while the pound weakened, after Prime Minister Theresa May and her party lost the parliamentary majority in an election as Brexit negotiations are scheduled to start later this month.

ANALYST'S TAKE: "The theme remained centered on the sell-off for tech stocks at the start of the week, though Asian markets could find some relief", said Jingyi Pan, a market strategist at IG in Singapore.

The bond market has adjusted to the recent sluggish inflation data.

"(We) expect Bank Indonesia to keep its policy rate steady this week.

China's two-year yields have in the last few sessions risen above its 10-year yields - a trend that has only happened in a few instances over the past decade and suggests investors have worries over the long-term health of the world's second biggest economy.

Historically, the HKMA would buy Hong Kong dollars when the currency fell to 7.83, rather than waiting for it reach the 7.85 lower limit of the trading band.

The positive sentiment across the region was also supported by oil prices which edged up in early trade, following statements that Opec leader Saudi Arabia was making significant supply cuts to customers.

USA crude CLc1 rose 0.3 percent to $46.19 a barrel.

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