Asia-Pacific investors stay put awaiting Fed meet conclusion
04:48, 15 December 2021
Asia-Pacific markets were mixed on Wednesday with investors holding back from making bets as they awaited clarity on the US Federal Reserve’s (Fed) tapering policy to be announced later in the day.
Markets in Japan and Australia posted minor movements in opposite directions, up 0.1% and down 0.6% respectively, by afternoon trade on Wednesday.
“Yesterday, risk-off momentum in overseas markets was seemingly caused more by concerns about the FOMC than the Omicron variant, and more by concerns over quantitative tightening (QT) than anxiety over rate hikes…,” said Naka Matsuzawa, research analyst of Nomura, in a note.
Quantitative tightening linked to excess liquidity
“QT is more directly linked to excess liquidity than yield levels, and thus to the shaping of asset prices. We think it is unlikely that the Fed would decide to go ahead with QT at this meeting, but simply becoming a topic of discussion will hurt risk assets more than bonds,” Matsuzawa added.
Meanwhile, analyst at ANZ Research differed in their view by expecting a tapering announcement from the Fed.
“A steelier tone, a higher dot plot and a doubling of the pace of tapering from USD15bn to USD30bn are widely expected,” said ANZ Research.
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Property gains lifts Hong Kong market
In Hong Kong, benchmark Hang Seng Index rose 0.2% to 23,684 by lunch time on Wednesday. The index was on track to snap three straight days of losses.
China’s central bank on Wednesday injected a further CNY500bn into the nation’s financial system via medium-term loans, following up on banking reserve requirement ratio (RRR) cut from last week. The Chinese central bank, in contrast to its global peers, has been easing monetary policy gradually to support its cash-strapped property sector with liquidity.
On Wednesday, the Hang Seng Mainland Properties Index rose 1.3% by midday. Real estate firms China Resources Land and Country Garden Services Holdings were among the top three gainers on the benchmark, up over 2.5% each by lunch break.
Gold stocks slump in Australia
In Tokyo, stocks in Toyota Motor jumped over 3.3% to JPY2113 after the automaker laid out its electric vehicle strategies.
Elsewhere, the technology sector was the top loser in Australia on Wednesday with the likes of buy now, pay later firm Afterpay down 3.7% and logistics software provider WiseTech Global down about 1%.
Australian gold stocks slumped on the S&P/ASX All Ordinaries Gold Index falling about 3% by Wednesday afternoon. Bullion prices witnessed a sharp drop on Tuesday ahead of expected tapering announcement from the Fed.
Read more: US potential rate hikes to put a lid on gold price in 2022
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