Singapore: Shares in Asian chip makers rose on Wednesday after strong earnings from US tech firms, and China’s main index hit a record on gains in the resources and property sectors.
The dollar steadied after falling on a report China would stop stockpiling foreign exchange reserves, but traders were cautious ahead of a Federal Reserve policy meeting statement. Gold held just below a two-week high, and oil prices bounced back towards $60 a barrel ahead of data expected to show falling fuel stocks in top consumer the US.
Caution before the outcome of the Fed meeting also hit share markets, with indexes in Australia, Hong Kong and South Korea all losing ground, although markets elsewhere in the region posted modest gains. Japanese markets were closed for a holiday.
The US central bank was widely expected to hold its key interest rate steady at 5.25%, but financial markets will focus on the accompanying statement for clues on the health of the world’s biggest economy and the outlook for interest rates. The Fed is expected to announce its decision around 1815 GMT.
“Investors will be really looking to see whether an interest rate fall will be in the second or third quarter,” said Guy Hutchings, chief investment officer at MFS Investment Management Ltd in Australia. “Also, any comments on sub-prime mortgage risks will be a key focus.”
Losses for lenders operating at the riskier end of the US home-loan mortgage have raised fears of slowing economic growth and prompted a wave of selling in global markets last week.
Financial bookmakers in London forecast Britain’s FTSE 100 index would open down 0.3-0.4%. MSCI’s broadest index of Asia Pacific shares outside Japan was up 0.2% at 0615 GMT.
Chip makers were lifted by renewed optimism on the tech sector, after US software-makers Oracle Corp. and Adobe Systems Inc. reported earnings that beat Wall Street expectations after the US market close on Tuesday.
In Seoul, Hynix Semiconductor Inc.—helped also by the resolution of a string of patent disputes with Toshiba Corp.—rose 1.8%. Taiwan Semiconductor Manufacturing Co. Ltd rose 0.7% and local rival United Microelectronics Corp. gained 0.8%.
Australia’s S&P ASX 200 fell 0.3%. China’s main index—whose sharp drop late last month triggered a global flight from risk that sent equity markets tumbling—was up 0.5%, after earlier hitting an all-time high. “More investors are entering the market,” said analyst Zhou Lin at Huatai Securities. “Most investors are still bullish because of prospects for strong corporate earnings growth.”
Taiwan’s benchmark index rose 0.3% and Singapore’s Straits Times gained 0.5%, but Seoul’s main index slipped 0.1% and Hong Kong’s Hang Seng was down 0.2%.
The dollar bought around 117.25 yen at 0615 GMT, up from lows of 116.90. The euro was at 156.15 yen against the dollar, and traded near $1.3315 little changed from levels overnight and up from Tuesday’s lows of $1.3268.