Asia: Markets muted ahead of earnings reports, Fed decision

[HONG KONG] Asian stocks markets were largely flat in early trade on Monday as investors braced for key earnings reports and US President Donald Trump's announcement of the new Federal Reserve chair.

Hong Kong and Tokyo shed early gains after traders - boosted by strong US growth data at the back end of last week - had initially followed Wall Street upward, while the Shanghai exchange was more sharply down.

Wall Street had closed with gains Friday on blowout earnings from tech giants, as well as strong third-quarter economic growth figures which overshot forecasts.

The figures showing Mr Trump hitting stated growth targets were also a boost to advocates of his tax reform plans, further fuelling investor sentiment.

But Asian markets shed early gains Monday morning, with Hong Kong and Tokyo trading flat, while Shanghai was 1.2 per cent down - its sharpest intraday fall since August.

Investors were braced for a raft of important earnings reports across Asia Monday, with banking giant HSBC publishing its 2017 third-quarter financial results at around 0400 GMT.

In Japan, where the Nikkei had risen to its best level in 21 years, hundreds of firms report earnings this week.

Gaming giant Nintendo was expected to announce bumper profits Monday, although a falling share price in early trading suggested profit-taking.

Crisis-hit Kobe Steel, which falsified strength and quality data for products sold to Japan's automotive industry, is also due to announce its earnings.

The Bank of Japan begins a two-day policy meeting on Monday, with wages having failed to follow private consumption and retail sales upward last quarter.

In Shanghai traders returned after a steady week featuring the China Communist Party congress to drive a sharp 1.2 per cent fall, with fears the government may step up its deleveraging campaign.

Three of China's biggest banks will also report on Monday, with investors anticipating decent profits after the country's fourth major bank, China Construction Bank, showed strong quarterly earnings last week.

BUSY US CALENDAR

Investors have plenty to digest this week with an extremely busy US schedule of events, including a Federal Reserve meeting and key data such as the October jobs report.

Mr Trump is also expected to announce whether he will replace US Federal Reserve Janet Yellen, likely by Friday before he embarks on an 11-day Asia tour.

At the weekend, Ms Yellen described the moribund inflation seen in the world's largest economy over the last year as a "mystery," a "surprise" and a "concern" all at once.

The Fed is considered unlikely to raise interest rates at this week's meeting, but the expectation remains of a rate hike in December.

Mr Trump's pick for chair, as well as US payroll data on Friday, will be closely watched for clues by investors.

Centrist Jerome Powell appeared to edge ahead as front-runner at the weekend, a potential blow for hawks favouring interest hikes sooner rather than later.

The dollar eased off in Asian trade following gains against the euro last week, when the European Central Bank said it would soon start to taper its monetary stimulus programme.

AFP