Gregor Stuart Hunter, Kenan Machado , Willa PlankAsian shares churned aimlessly Tuesday with volumes holding steady, as investors awaited key policy decisions from the U.S. Federal Reserve and the Bank of Japan.
“People are just waiting for the Fed,” said Hao Hong, chief strategist at Bocom International. The Fed is unlikely to raise rates, “unless they want to really surprise the market,” he said.
Japan’s Nikkei Stock Average NIK, -0.16% closed down 0.2%. Utilities and telecoms shares led gains as insurers and real-estate stocks slipped.
The BOJ is due to release a comprehensive review of its negative-interest-rate policy at its meeting Wednesday, which will address concerns about banks’ lending margins after it cut interest rates on some deposits to negative earlier this year.
See: How a ‘twist’ by the Bank of Japan could upstage the Fed
Bank shares largely rose, with Mitsubishi UFJ Financial Group Inc. 8306, +0.82% up 0.8%, Sumitomo Mitsui Financial Group Inc. 8316, +0.50% gained 0.5% and Resona Holdings Inc. 8308, +0.23% edged up 0.23%.
“Both the BOJ and FOMC [Federal Open Market Committee] meetings this week carry potential to influence Asian currencies,” wrote Patrick Bennett, head of macro strategy for Asia at CIBC in Hong Kong. “And it will be disappointing, but not totally unexpected, if both do not at least provide some information on which to judge the likely track of markets in the weeks ahead.”
Hong Kong’s Hang Seng Index HSI, -0.08% closed down 0.08%, while rates to borrow the Chinese yuan overnight fell to 12.13533% from 23.683% on Monday, the highest rate since January.
The Hong Kong interbank offered rates for the Chinese yuan have become elevated in the past few weeks, a sign that the People’s Bank of China is trying to deter speculators from shorting the currency.
Australia’s share market resumed normal trade Tuesday. A hardware failure in the main database used by ASX’s equities system cut short Monday trade for Australia’s main equities market, catching the attention of the country’s securities regulator.
The Australian Securities and Investments Commission said in a statement: “We will examine the cause and any effects of yesterday as a priority and as part of our close oversight of market operators.” The ASX said it would provide a detailed incident report on the matter later this week.
Australia’s S&P/ASX 200 XJO, +0.17% rose slightly, up 0.2%. BHP Billiton BHP, +2.33% was up 2.3% with Rio Tinto Ltd. RIO, +1.55% higher by 1.6%.
Australia’s central bank indicated Tuesday that it would keep interest rates on hold, possibly until next year, to support growth. Sectors of the economy sensitive to interest rates, such as housing construction, were helped by record low rates, while the economy was growing strongly, the Reserve Bank of Australia said in the minutes of its Sept. 6 board meeting, released Tuesday.
South Korea’s Kospi SEU, +0.49% was up 0.5%, while Taiwan’s Taiex Y9999, +0.10% gained 0.1%.
Asian share-trading volumes were largely expected to stay low as traders awaited the BOJ’s policy decision Wednesday, analysts said. The Fed will announce its decision in the early hours of Thursday, Asia time.
“It’s about risk management,” said Chris Weston, chief market strategist at IG, referring to trading in Asia ahead of these decisions. He said the emphasis was on protecting capital and hedging exposure.
China’s share market ended down Tuesday, with the Shanghai Composite Index SHCOMP, -0.10% off 0.1% at the close of the trading day. “I think there’s just no reason for the market to go up,” Hong of Bocom said of China’s stocks.
He cited the dangers of an overheated Chinese property market, saying that the rise in mortgages would pose risks for banks and the real economy in the case of a property downturn.