Asian shares climb ahead of Fed decision

December 18, 2013

Asian markets rose today, with attention focused on Washington as investors await the end of a Federal Reserve policy meeting to find out its plans for its huge stimulus programme.

Japanese equities were the stand-out performers after official data showed a surge in exports thanks to a weaker yen.

Tokyo climbed 1.54% by the break, Sydney added 0.10% and Seoul strengthened 0.26% while Shanghai gained 0.10% and Hong Kong was 0.43% higher.

Regional traders were given a soft lead from Wall Street, where the three main indexes ended in the red following a tepid set of economic figures.

With the Fed due to wrap up its two-day policy meeting later in the day, opinion is split on whether or not it will announce a cut in its $85 billion a month bond-buying scheme.

While some analysts point to a string of figures that indicate a healthy pick-up in the US economy, boosting the argument for a slight reduction, others say the central bank will likely wait until early next year to see if the recovery can be sustained.

"Wednesday's Federal Reserve monetary policy announcement is one of the most anticipated events of the year," said Kathy Lien of BK Asset Management.

John Kicklighter, chief currency strategist at DailyFX, said speculation about the Fed decision "has run rampant".

The latest numbers showed the economy is still fragile. Consumer prices were unchanged in November compared with October and up a tame 1.2% from the previous year. Inflation remains well below the Fed's 2.0% annual target.

Income growth for Americans – a key indicator of the health of the economy – remained modest at 1.1% year-on-year

The Dow edged a touch lower, the S&P 500 fell 0.31% and the Nasdaq eased 0.14%.

On currency markets, the dollar rose to 102.82 yen (RM3.25) in early trade from 102.63 yen (RM3.25) in New York late yesterday. The euro bought $1.3762 (RM4.47) and 141.50 yen (RM4.47) against $1.3765 (RM4.47) and 141.28 yen (RM4.47).

Japanese shares outperformed the region after Tokyo released figures showing exports last month rose 18.4% year-on-year, boosted by shipments of automobiles and a weaker yen. Expectations had been for a 17.3% rise, according to Dow Jones Newswires.

However, while the likes of Toyota and Sony benefited, the softer currency also sent the price of imports higher, especially for energy. Imports soared 21.1%, leaving Tokyo with a trade deficit for the 17th straight month.

Oil prices edged up. New York's main contract, West Texas Intermediate for January delivery, was up seven cents at $97.29 (RM3.08) in early Asian trading while Brent North Sea crude for February gained seven cents to $108.51.

Gold fetched $1,234.40 at 0220 GMT (10.20am MYT) compared with $1,239.20 late yesterday. - AFP, December 18, 2013.

Biz Updates from PR Newswire