Asian stocks rallied early Tuesday, followed Wall Street higher, as investors awaited the outcome of the Federal Reserve’s much-anticipated policy meeting to see if the central bank would telegraph any changes to the United States’ monetary policy outlook.
In early trade, Japan’s Nikkei gained 0.89 percent, while MSCI’s broadest index of Asia-Pacific equities outside Japan gained 0.23 percent.
Australian shares gained 1.03 percent in early trading, while Chinese blue chips dipped 0.16 percent and Hong Kong dipped 0.21 percent. Following a public holiday on Monday, all three reopened for business.
“I expect a lot of chop in the next 24-48 hours, first on the upside, then a small correction as the market positions itself, and then we’re off to the races if we receive the Fed’s green light Thursday morning,” Rodda said.
Traders will pay special attention to any signals in the meeting’s final statement about whether and when the Fed wants to cut its bond-buying program, amid concerns about inflation as the US economy recovers from the pandemic’s aftermath. On Tuesday, the two-day summit will begin.
“If three more members pencil in rate hikes for 2023, the majority will be in favor of changing rates quite soon,” they wrote.
The dollar index, which measures the greenback against a basket of six currencies, was roughly unchanged at 90.502 in early Asia trading, indicating that currency markets remained quiet ahead of the meeting.
Benchmark 10-year rates remained unchanged from Monday, when they bounced back from a three-month low on Friday.
In terms of commodities, U.S. crude rose 0.55 percent to $71.27 per barrel, while Brent crude was at $73.24 per barrel, up from $73.64 per barrel on Monday, its highest level since April 2019.
Gold was down marginally at $1862.21 per ounce on the spot market.