Asian stocks, dollar steady as Fed day arrives

[HONG KONG] Markets were subdued during the Asian day as investors held fire before the Federal Reserve's expected interest-rate hike on Thursday. Crude and Japanese government bonds were outliers, with oil retreating on industry data showing US stockpiles rose and debt rallying as the central bank stepped up purchases.

About five stocks fell for every four that rose on a gauge of Asian equities. Australia's benchmark index rallied toward a 16-month high as Tatts Group Ltd surged after a consortium bid for the betting and lottery company, while Japan's Topix index halted a six-day advance. A gauge of the greenback's strength was little changed. The yield on Japanese 30-year bonds slid five basis points. Oil declined 1.1 per cent in New York.

The Fed's path to tighter monetary policy has been delayed throughout 2016, as first instability in Chinese markets, then the shock votes for Brexit and Donald Trump, put policy makers on the back foot. The US central bank is expected to boost borrowing costs just as the focus shifts back to governments, with fiscal easing at the hands of incoming US President Trump speculated to drive economic growth going forward. After Thursday, traders see a two-in-three chance of additional rate increases from the Fed by June, futures show.

"We go into the New Year with the market and the Fed on the same page in terms of where rates are going," said Chris Weston, chief markets strategist in Melbourne at IG Ltd. "The recent upbeat sentiment - specifically in global equities - has not just been about what 'Trumponomics' could bring to inflation and growth, but we are genuinely seeing an improvement in the economic data flow in many developed markets."

Japan's Tankan gauge of sentiment among large manufacturers came in as economists expected for the fourth quarter, rising to 10 from six in the previous period. India also reports on wholesale prices Wednesday.

The MSCI Asia Pacific Index added 0.2 per cent as of 12.53 pm Tokyo time, with telecom shares rising most and material producers falling.

Australia's S&P/ASX 200 Index climbed 0.8 per cent; Tatts surged 8.9 per cent after a consortium including Macquarie Group Ltd and KKR & Co offered as much as S$5.5 billion for the company.

Hong Kong's Hang Seng Index gained 0.6 per cent as oil companies rallied.

Topix little changed; Shanghai Composite Index rose less than 0.1 per cent and South Korea's Kospi fell 0.2 per cent.

U.S. index futures were little changed after the S&P 500 rose 0.7 per cent to an all-time high and the Dow Average neared 20,000 points. Currencies The yen was little changed at 115.17 per dollar after pulling back by 0.2 perc ent last session. The euro was steady at US$1.0636.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fluctuated after rising 0.1 per cent on Tuesday and sinking 0.6 per cent in the session before that.

BLOOMBERG