Asian Shares Are Muted as Traders Await Fed Clues: Markets Wrap
(Bloomberg) — Asian stocks were mixed in muted trading as investors awaited clues on the Federal Reserve’s policy path in its final interest-rate decision of the year.
Chinese equities dropped after a government report showed inflation edged higher in November, damping expectations for lower interest rates. Shares also edged lower in Japan, while they rose in South Korea and Taiwan. Silver extended gains after rising to a record, while the dollar was mixed against its major peers.
Traders are anticipating a third consecutive Fed rate cut Wednesday, while the focus will be on the central bank’s latest dot plot, economic projections and comments from Chair Jerome Powell. Volatility around the decision has been among the defining characteristics of equity trading in the past six weeks, superseding concern about a potential AI bubble and the impact of President Donald Trump’s trade policies.
“Asian equities are drifting in light red as investors brace for one of the most ‘known-yet-unknown’ final Fed packages of the year,” said Hebe Chen, an analyst at Vantage Markets in Melbourne. “With a 25 basis-point cut widely viewed as locked in, the real swing factor will be the Fed’s economic projections, unusually delivered without a full quarter of verified data — leaving a wide runway for interpretation and volatility.”
China’s inflation quickened last month, adding to signs deflation is easing even as downward pressures on costs remain widespread. The consumer-price index climbed to 0.7% from a year earlier, after a 0.2% rise in October, according to data released by the National Bureau of Statistics.
Chinese retail stocks gained after Beijing called for prioritizing the industry as a key driver to boosting domestic demand. Retail should be prioritized as a key driver for building a robust domestic demand system and strengthening the domestic economic cycle, Vice Commerce Minister Sheng Qiuping said at a briefing. Yonghui Superstores and Fujian Dongbai Group both rose by the 10% daily limit.
Silver extended its rally after breaking above $60 an ounce for the first time on Tuesday, with momentum coming from supply tightness and bets on further monetary easing by the Fed. The white metal rose as much as 1.3% to a record $61.4797 an ounce on Wednesday.
“Silver has a big retail and speculative base,” said David Wilson, director of commodities strategy at BNP Paribas SA. “Once you have an upside momentum, it tends to bring in more money.”
Treasuries were little changed in Asia after dropping Tuesday when US data showed October job openings increased to the highest level in five months. The Fed’s two previous cuts this year were intended to address weakening employment conditions, including a rise in the unemployment rate to nearly 4.5%.
Kevin Hassett, the frontrunner in Trump’s search to replace Powell, said on Tuesday that he sees plenty of room to substantially lower rates, even more than a quarter-point cut.
There’s a good chance the Fed statement could be tweaked in ways that signal a potential pause, Richard Franulovich, head of foreign-exchange strategy at Westpac Banking Corp. in Sydney, wrote in a client note.
“The dots are an x-factor and its worth noting the 2026 median for one cut is a flimsy one — it would only take one dovish member to pencil in an additional cut to shift the median lower to two cuts,” he said.
Another Fed rate cut is seen as further eroding the options for investors who are looking for healthy income levels. In recent years, investors were paid handsomely to play it safe. Short-term US Treasuries offered yields above 5% — a rare chance to earn solid returns without locking up capital or chasing risk.
The Fed’s expected cut is a reminder that “today’s yields may not always be available,” said James Turner, co-head of global fixed income for EMEA at BlackRock in London. Pension and insurer clients are looking toward high yield, emerging-market debt, AAA rated collateralized loan obligations and securitization investments, to “enhance income and diversify,” he said
Oil held the biggest two-day drop in a month as concerns about global oversupply continued to weigh on sentiment.
Corporate News:
China Vanke Co. creditors are set to meet Wednesday as the distressed developer makes one more push to win support for a bond extension plan aimed at averting a default. SpaceX is moving ahead with plans for an initial public offering that would seek to raise significantly more than $30 billion, people familiar with the matter said, in a transaction that would make it the biggest listing of all time. Major investors in First Brands Group have offloaded stakes in the bankrupt auto supplier’s debt in recent days, causing the value of its most senior loan to collapse and prompting it to pull forward a lender call to calm nerves. Parkview Group Ltd. has secured a $940 million loan refinancing deal backed by a key Beijing asset, according to people familiar with the matter, ending a months-long saga that had weighed on the Hong Kong developer amid China’s prolonged property crisis. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 1:32 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.6% Japan’s Topix rose 0.1% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.4% The Shanghai Composite fell 0.7% Euro Stoxx 50 futures fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1626 The Japanese yen rose 0.2% to 156.64 per dollar The offshore yuan was little changed at 7.0601 per dollar Cryptocurrencies
Bitcoin fell 0.2% to $92,459.64 Ether rose 0.3% to $3,311.03 Bonds
The yield on 10-year Treasuries was little changed at 4.18% Japan’s 10-year yield was unchanged at 1.960% Australia’s 10-year yield advanced four basis points to 4.80% Commodities
West Texas Intermediate crude rose 0.2% to $58.35 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael G. Wilson.
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