Asian markets mixed ahead of Fed meeting

[HONG KONG] Asian markets were mixed on Wednesday as bargain-hunting was offset by more losses on Wall Street, while investors await the outcome of a Federal Reserve policy meeting.

Oil prices extended their losses to fresh five-and-a-half-year lows. The dollar recovered slightly against the yen ahead of the Fed get-together, which is being closely watched for clues about its interest rate plans.

Tokyo rose 0.38 per cent, or 64.41 points to finish at 16,819.73 after sinking almost three per cent in the previous two sessions.

Sydney added 0.19 per cent, or 9.6 points, to 5,161.9 and Shanghai jumped 1.31 per cent, or 39.50 points, to end at 3,061.02.

But Seoul fell 0.21 per cent, or 3.97 points, to 1,900.16 while in late afternoon trade Hong Kong gave up 0.19 per cent.

Global markets have been in turmoil this week due to concerns about the effect of plunging oil prices on energy firms as well as the crude-dependent Russian economy, which is also straining under Western sanctions.

The ruble - which plunged to a record low of 80 to the dollar Tuesday - sat at 70.77 in early Moscow trade Wednesday.

The central bank ramped up interest rates to 17 per cent from 10.5 per cent on Tuesday and spent about US$2 billion to try to support the unit.

Sebastien Barbe, head of emerging market research and strategy at Credit Agricole said in a note that the rate hike and plunging oil prices suggest "a meaningful recession next year".

"Further depreciation pressure suggests that rate hikes and forex intervention may not be enough. At the current juncture, the odds of targeted capital controls are increasing significantly." On Wednesday crude slipped again, ahead of the release of the latest US supply report. US benchmark West Texas Intermediate for January delivery fell 46 cents to $55.47 while Brent crude for February was down 39 cents to $59.62.

US dealers offered Asia a weak lead, with unease over the crude market as well as Russian woes leading to a sell-off on Wall Street Tuesday.

The Dow eased 0.65 per cent, the S&P 500 fell 0.85 per cent and the Nasdaq tumbled 1.24 per cent.

However, some Asia investors took advantage of cheap valuations.

"After several days of steep falls, stocks are definitely cheap enough to pick up, but the markets remains beholden to exterior influences such as volatile currency and commodity price," Hiroichi Nishi, SMBC Nikko Securities general manager of equities, told Dow Jones Newswires.

"The turmoil may be far from over." Eyes are now on the end later Wednesday of the Fed's two-day meeting, with dealers looking for some guidance over monetary policy amid growing speculation that the central bank will raise interest rates by the middle of 2015.

Despite expectations of higher US rates the dollar has retreated against the yen in recent days, with fears over the global economy sending traders into safer investments.

However the greenback fought back to 117.11 yen from 116.59 yen in New York, although it is still down from 117.39 yen in Tokyo earlier Tuesday.

The euro bought 146.29 yen and US$1.2486 against 145.86 yen and $1.2511.

Chinese investors continue to pile into the Shanghai market, chasing a rally on hopes the government will introduce measures to kickstart the economy. The huge influx of dealers has seen the composite index surge by a quarter over the past month, helped by an interest rate.

Gold was at US$1,198.16 an ounce compared with US$1,199.36 late Tuesday.

In other markets: - Taipei tumbled 1.37 per cent, or 122.55 points, to 8,828.36.

Taiwan Semiconductor Manufacturing Co. fell 1.88 per cent to NT$130.5 while smartphone maker HTC was 1.40 per cent lower at NT$141.0.

- Wellington was flat, edging up 0.83 points to 5,496.59.

Air New Zealand gained 0.40 per cent to NZ$2.51 and Fletcher Building was steady on NZ$7.97.

AFP