Asian shares exhibited a mixed performance on Wednesday, while oil prices slumped to six-month lows as investors awaited the Federal Reserve’s final policy decision of the year, seeking clues on potential rate cuts in the coming year.
Brent crude hit $72.57 a barrel, marking its lowest level since late June, while U.S. crude dipped to $68.01 a barrel amid concerns of softening demand and oversupply.
The Federal Reserve’s rate decision, expected to keep rates unchanged, took center stage on Wednesday. Market attention turned to Fed Chair Jerome Powell’s press conference and the dot plot, offering insights into the future policy trajectory.
Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank, noted the potential for drama in the December Federal Open Market Committee (FOMC) meeting, emphasizing the importance of the dot plot and economic projections revisions.
Investors are anticipating the Fed’s inclination to begin easing monetary policy in 2024, with a 75% chance of the first cut as early as May, according to the CME FedWatch tool.
Ahead of the decision, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%. The Nikkei in Japan gained 0.25%, EUROSTOXX 50 futures slipped 0.02%, and FTSE futures remained stable. S&P 500 futures rose 0.1%, and Nasdaq futures increased by 0.17%.
U.S. bond yields hovered near recent lows, with the two-year Treasury yield at 4.7327% and the benchmark 10-year yield at 4.2063%.
In China, blue-chip stocks declined by 1.6%, while Hong Kong’s Hang Seng Index fell over 1%. Concerns arose as Beijing’s policy adjustments to support economic recovery in 2024 did not provide strong stimulus measures during the Central Economic Work Conference.
The U.S. dollar remained on the defensive against the British pound, standing at $1.2549. In Japan, expectations are rising for the Bank of Japan (BOJ) to shift away from its ultra-loose monetary policy.
In commodity markets, gold slipped to a more than three-week low of $1,973.35 an ounce.
As markets await the Federal Reserve’s decision and assess global economic signals, a mix of optimism, caution, and uncertainty prevails across Asian markets.