Asian Markets Trade Mostly Higher

Asian stock markets are trading mostly higher on Wednesday, following the mixed cues from Wall Street overnight, as traders remain optimistic about the outlook for interest rates as they cautiously await the US Fed’s monetary policy announcement later in the day. Asian markets closed mostly lower on Tuesday.

Though the Fed is widely expected to leave interest rates unchanged, traders will be looking to the accompanying statement for additional clues about a possible rate cut in September.

According to CME Group’s FedWatch Tool, there is currently an 87.7 percent chance the Fed will lower rates by a quarter point in September and an 11.9 percent chance of a half point rate cut.

Australian shares are trading sharply higher on Wednesday, recouping the losses in the previous session, with the benchmark S&P/ASX 200 moving well above the 8,000 mark, following the mixed cues from Wall Street overnight, with gains across most sectors led by technology and mining stocks.

The benchmark S&P/ASX 200 Index is gaining 94.50 points or 1.19 percent to 8,047.70, after touching a high of 8,061.60 earlier. The broader All Ordinaries Index is up 96.60 points or 1.18 percent to 8,273.20. Australian stocks ended notably lower on Tuesday.

Among major miners, Fortescue Metals are gaining more than 2 percent, Rio Tinto is adding almost 1 percent and Mineral Resources is edging up 0.4 percent, while BHP Group is edging down 0.2 percent

Oil stocks are mostly higher. Santos and Beach energy are edging up 0.1 to 0.4 percent each, while Woodside Energy is gaining almost 1 percent. Origin Energy is losing more than 3 percent.

In the tech space, Afterpay owner Block is edging up 0.2 percent, Appen is advancing more than 5 percent, while WiseTech Global and Xero are adding more than 1 percent each. Zip is losing 2.5 percent.

Among the big four banks, Commonwealth Bank is edging up 0.4 percent, while ANZ Banking, National Australia Bank and Westpac are gaining almost 1 percent each.

Among gold miners, Resolute Mining is gaining more than 1 percent, while Newmont and Evolution Mining are edging up 0.3 percent each. Gold Road Resources is declining almost 6 percent. Northern Star Resources is flat.

In economic news, consumer prices in Australia were up 1.0 percent on quarter in the second quarter of 2024, the Australian Bureau of Statistics or ABS said on Wednesday – unchanged and in line with expectations. On a yearly basis, inflation rose 3.8 percent – again matching forecasts and up from 3.6 percent in the three months prior. The Reserve Bank of Australia’s trimmed mean was up 0.8 percent on quarter and 3.9 percent on year, while the weighted median added 0.8 percent on quarter and 4.1 percent on year.

The ABS also said value of retail sales in Australia was up a seasonally adjusted 0.5 percent on month in June, the Australian Bureau of Statistics said on Wednesday – coming in at A$36.204 billion. That beat forecasts for an increase of 0.2 percent following the 0.6 percent increase in May. On a yearly basis, sales rose 2.2 percent. For the second quarter of 2024, retail sales volume slipped 0.3 percent on quarter after falling 0.4 percent in the three years prior. Sales were down 0.6 percent on a yearly basis.

The Reserve Bank of Australia said Private sector credit in Australia was up 0.6 percent on month in June, beating forecasts for 0.4 percent, which would have been unchanged. On a yearly basis, private sector credit climbed 5.6 percent.

In the currency market, the Aussie dollar is trading at $0.650 on Wednesday.

The Japanese stock market is notably lower on Wednesday, giving up some of the gains in the previous two sessions, following the mixed cues from Wall Street overnight. The Nikkei 225 is falling well below the 38,400 level, with weakness index heavyweights, exporters and technology stocks partially offset by gains in financial stocks.

The benchmark Nikkei 225 Index closed the morning session at 38,369.54, down 156.54 points or 0.41 percent, after hitting a low of 37,954.38 earlier. Japanese stocks ended modestly higher on Tuesday.

Market heavyweight SoftBank Group is losing almost 4 percent and Uniqlo operator Fast Retailing is edging down 0.3 percent. Among automakers, Honda is losing almost 1 percent and Toyota is down more than 2 percent.

In the tech space, Advantest is edging down 0.1 percent, while Screen Holdings and Tokyo Electron are losing more than 1 percent each.

In the banking sector, Mizuho Financial is gaining almost 3 percent, while Sumitomo Mitsui Financial and Mitsubishi UFJ Financial are adding more than 2 percent each.

Among the major exporters, Sony is losing almost 2 percent, Mitsubishi Electric is declining more than 1 percent and Canon is edging down 0.1 percent, while Panasonic is gaining more than 1 percent.

Among other major losers, Oriental Land is plunging almost 10 percent, Murata Manufacturing is losing almost 5 percent and ANA Holdings is down more than 3 percent, while Kao, Mitsubishi Motors, Mercari, Eisai, Keisei Electric Railway and Shiseido are declining almost 3 percent each.

Conversely, TDK is gaining more than 3 percent, while Japan Post and Resona are adding almost 3 percent each.

In economic news, the Bank of Japan will wrap up its monetary policy meeting on Wednesday and then announce its decision on interest rates. The BoJ is widely expected to keep its benchmark lending rate unchanged at 0.10 percent.

The value of retail sales in Japan was up a seasonally adjusted 3.7 percent on month in June, the Ministry of Economy, Trade and Industry or METI said on Wednesday – coming in at 13.678 trillion yen. That beat expectations for an increase of 3.3 percent following the 2.8 percent gain in May. On a monthly basis, retail sales rose 0.6 percent. For the second quarter of 2024, retail sales gained 1.8 percent on quarter and 2.8 percent on year at 40.632 trillion yen.

The METI also said industrial output in Japan dropped a seasonally adjusted 3.6 percent on month in June, the Ministry of Economy, Trade and Industry said on Wednesday. That exceeded expectations for a decline of 4.2 percent following the 3.6 percent increase in May. On a yearly basis, industrial output slumped 7.3 percent after rising 1.1 percent in the previous month. Upon the release of the data, the METI downgraded its assessment of industrial production, saying that it fluctuates indecisively but has weakened.

In the currency market, the U.S. dollar is trading in the higher 152 yen-range on Wednesday.

Elsewhere in Asia, Hong Kong and China are up 1.5 and 1.2 percent, respectively. New Zealand, Singapore, South Korea, Malaysia, Taiwan and Indonesia are higher by between 0.1 and 0.4 percent each.

On the Wall Street, stock indexes moved in more starkly opposite directions during trading on Tuesday after ending yesterday’s choppy trading session narrowly mixed. While the tech-heavy Nasdaq moved sharply lower, the Dow ended the day firmly positive.

The Nasdaq tumbled 222.78 points or 1.3 percent to 17,147.41, ending the session at its lowest closing level in well over a month. The S&P 500 also fell 27.10 points or 0.5 percent to 5,436.44, while the narrower Dow climbed 203.40 points or 0.5 percent to 40,743.33.

The major European markets also turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index dipped by 0.2 percent, the French CAC 40 Index and the German DAX Index climbed by 0.4 percent and 0.5 percent, respectively.

Crude oil prices fell Tuesday amid continued concerns about the outlook for demand, and ahead of the Federal Reserve’s monetary policy announcement and weekly inventory data later today. West Texas Intermediate crude oil futures for September ended down $1.08 or 1.42 percent at $74.73 a barrel.