Most Asian equities paused after a record-breaking rally on Tuesday and currencies were mixed, as investors braced for the Federal Reserve’s policy meeting and awaited details from U.S. President Donald Trump’s tour of Asia.
South Korea’s benchmark index slipped 1.7%, pulling back after breaching the 4,000 level for the first time on Monday, as investors became cautious ahead of earnings from SK Hynix and Samsung Electronics.
Malaysian shares slipped 0.4% after gaining 0.3% in the previous session, while Taiwan’s benchmark index was little changed a day after crossing the 28,000 mark. Indonesia stocks were 0.2% lower.
Equities in Thailand shed 0.3%, while Singapore stocks gained 0.9% to hit a record high, continuing a six-session rally. Regarding U.S.-China trade talks on Thursday, investors said they were excited by the possibility of a potential truce and wary of being disappointed with the eventual deal.
“We expect a partial deal to emerge from the meeting, likely focused on time-sensitive and politically manageable areas,” analysts at Bank of America said in a note.
“A broader agreement will likely require further negotiation and may not materialise until Trump’s state visit to China.”
Also on the trade front, Trump and Japanese Prime Minister Sanae Takaichi signed a framework agreement covering rare earths. Japan’s Nikkei lost 0.3% on profit-taking.
Investors are also awaiting the Fed’s policy decision on Wednesday, which could contain comments from Chairman Jerome Powell offering clarity on the path of future rate cuts as the U.S. government shutdown drags on.
Markets have already priced in a reduction of 25 basis points. The dollar index, which measures the greenback’s strength against six major currencies, held steady as investors awaited details on trade and interest rates.
Asian currencies were mixed, with the Malaysian ringgit, Taiwan dollar and the Thai baht edging higher, between 0.2% and 0.3%.
However, the Philippine peso dropped 0.5% to hit its lowest level in more than three years, while the Indian rupee lost 0.1%.
Oil prices slipped, with plans by OPEC to raise production tempering optimism about a potential U.S.-China trade agreement. Oil prices influence regional currencies, since most emerging Asian economies are net oil importers and a rise in prices typically widens their current account deficits.
Elsewhere in the region, the Singapore dollar gained 0.2% and the South Korean won lost 0.2%.
HIGHLIGHTS:
** As Trump-Xi trade talks near, investors turn to history as a guide
** China and ASEAN, hit by U.S. tariffs, sign upgraded free trade pact – Reuters
