Most Asian Stocks Retreat, Mull Kim,Trump Summit, Looming Fed

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ASIAN STOCKS TALKING POINTS:

  • Most Asian indexes were lower
  • The markets wondered what had actually been achieved by this week’s historic US/North Korea summit
  • The Dollar made modest gains as that Fed meeting approached

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Asian markets were mostly lower Wednesday as investors looked toward the US Federal Reserve’s June monetary policy decision which will come early on Thursday local time.

The Fed is very widely expected to raise interest rates once more, with market focus on how many more there might come this year and next. Markets were also a little nonplussed by the immediate aftermath of this week’s meeting between US President Donald Trump and North Korean leader Jim Jong Un, uncertain as to what more will come of it.

Still, as the Fed loomed the Nikkei was a lone regional riser, up 0.5% in the Tokyo afternoon. All other major indexes were lower, however, if not by much. Shanghai was down 0.7% with the ASX 200 off by 0.6%.

The US Dollar edged broadly if only slightly higher through the session. Its Australian counterpart dipped a bit when Reserve Bank of Australia Governor Philip Lowe made a speech in Melbourne suggesting once more that while its next interest rate move will probably be a rise, such a thing is not coming soon. This take can hardly have surprised markets – futures didn’t suggest an increase until late 2019 in any case, but the Aussie slipped back a little anyway.

Gold prices were steady, but DailyFX’s own Senior Currency Strategist Ilya Spivak thinks that a hawkish Fed later could see it slip further. The spot price has been rangebound on its daily chart since the sharp falls seen in mid May.

Spot Gold Price, Daily Chart

Crude oil prices slipped, reportedly as the markets looked to the prospect of rising supply.

Still to come Wednesday are the UK Consumer Price Index and Eurozone industrial production data, with US mortgage application numbers and crude oil inventory figures from the Department of Energy also on the slate.

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— Written by David Cottle, DailyFX Research

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