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Indian Morning Briefing: Asian Markets Mostly Lower Ahead of Fed Decision

DJIA         34299.33   -94.42  -0.27% 
Nasdaq       14072.86  -101.29  -0.71% 
S&P 500       4246.59    -8.56  -0.20% 
FTSE 100      7172.48    25.80   0.36% 
Nikkei Stock 29370.92   -70.38  -0.24% 
Hang Seng    28599.68   -38.85  -0.14% 
Kospi         3275.96    17.33   0.53% 
SGX Nifty*   15843.50   -10.5   -0.07% 
*June contract 
USD/JPY  110.10-11   +0.04% 
Range    110.14   110.04 
EUR/USD  1.2117-20   -0.07% 
Range    1.2131   1.2117 
CBOT Wheat July $6.614 per bushel 
Spot Gold     $1,855.27    0.2% 
Nymex Crude (NY) $72.23   $1.35 

U.S. stocks fell on Tuesday after fresh data showed Americans slowed their spending last month.

The Dow Jones Industrial Average dropped 94.42 points, or 0.3%, to 34299.33, while the S&P 500 lost 8.56 points, or 0.2%, to 4246.59. The Nasdaq Composite slid 101.29 points, or 0.7%, to 14072.86. The latter two set record closes on Monday.

The market is watching a two-day Federal Reserve policy meeting for any signs that the central bank is thinking about altering its monetary policy as the economy recovers from the pandemic-induced recession.


Japan's Nikkei Stock Average was 0.1% lower at 29404.37 in early trade, weighed by pharmaceutical and electrical appliance stocks. The upcoming U.S. Federal Reserve meeting was in focus for investors. Chugai Pharmaceutical declined 1.3%, Kaken Pharmaceutical fell 0.6% and Mochida Pharmaceutical was off 0.9%. Stocks of electrical appliances makers were also lower. Nidec Corp. fell 1.0%, Mabuchi Motor was off 0.3% and Fuji Electric Co. slipped 0.2%. Among IT-related stocks, NEC Networks & System Integration Corp. was off 1.1% and Systena Corp. declined 0.6%.

South Korea's benchmark Kospi was up 0.3% at 3268.68 in early trading, led by financial stocks. Investors were eyeing a policy update from the Federal Reserve due later in the day. Expectations for better net interest margins for local banks sent Woori Financial Group and Hana Financial Group 2.6% and 2.0% higher, respectively. South Korea's central has been largely viewed as intending to raise its base rate later this year. Hyundai Mipo Dockyard gained 2.2% on brisk contract wins. Index heavyweight Samsung Electronics added 0.4%. Biotech company Celltrion Inc. fell 1.2% amid profit taking.

Hong Kong stocks were lower in morning trade following weakness in U.S. equities overnight. The benchmark Hang Seng Index shed 0.3% to 28553.46. KGI Securities expected the momentum to remain muted in the near term, with trading likely to be rangebound. The brokerage estimated the initial support level for the HSI at 28450. Investors would be focusing on the U.S. Fed meeting and major Chinese economic data for May due Wednesday, it added.

Chinese stocks were down, in line with broadly lower Asian equities following weakness on Wall Street overnight. The benchmark Shanghai Composite Index fell 0.1% to 3552.80 and the Shenzhen Composite Index shed 0.7% to 2370.13. The ChiNext Price Index, which measures the performance of emerging industries and startups, dropped 1.5% to 3212.19. N-Securities expected potential further declines Wednesday, as the market corrects from a broad rally in May. The brokerage advised investors to remain cautious and adopt a wait-and-see approach before clearer signs of a recovery emerge.


Asian currencies consolidated against USD amid wait-and-see mood before the FOMC decision later in the global day. The Fed's dot plot, economic forecasts and Fed Chair Jerome Powell's comments would be closely scrutinized for clues on the timeline for tapering, IG said. USD/JPY was little changed at 110.10, USD/SGD was flat at 1.3277 and AUD/USD was steady at 0.7687.


Gold edged lower amid lingering worries over possible Fed tapering ahead of the conclusion of the FOMC meeting later today. CBA said it's worth noting that when the Fed began discussing tapering QE in 2013 following the global financial crisis, gold futures responded negatively, tumbling by around 28% in 2013. The main indicator to watch was the direction of the U.S. 10-year real yield, which has a negative correlation with the price of gold and has been historically strong, CBA said. Spot gold was down 0.2% at $1,855.27/oz.


Oil was higher in early Asian trade but may be pressured if the Federal Reserve has a less dovish tone at its upcoming meeting, which should send the U.S. dollar tentatively higher, Oanda said. USD often influences oil trading since the commodity is priced in U.S. dollars. "WTI crude should struggle to extend gains well beyond the $72.00 level," Oanda said. Front-month WTI crude-oil futures and front-month Brent crude oil were each 0.6% higher at $72.56/bbl and $74.41/bbl, respectively.

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(END) Dow Jones Newswires

June 15, 2021 23:15 ET (03:15 GMT)

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