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Asia: Markets subdued despite Wall St record, eyes on Fed

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[HONG KONG] Asian investors on Wednesday struggled to track a record close on Wall Street as they await the Federal Reserve's latest policy meeting hoping for a guide on its plans for monetary policy.

The central bank is all but certain to lift interest rates after its meeting ends later in the day but the main focus will be on chair Janet Yellen's comments afterwards.

Some analysts suggest the rise could be the Fed's last this year as traders fret over tepid inflation and the future of Donald Trump's big-spending, tax-cutting agenda. Hopes for those policies had fuelled expectations of a surge in prices - and a jump in borrowing costs - but is now in trouble as the tycoon in enveloped in political crises.

"With the rate hike now 96 per cent priced in focus will fall on the Fed's forward guidance and importantly their views surrounding low inflation," Stephen Innes, senior trader at Oanda, said in a note.

The dollar moved in a tight range against the yen in Asia ahead of the Fed announcement, while equity markets were subdued despite a strong lead from Wall Street, where the Dow and S&P 500 ended at record highs.

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Tokyo ended the morning session 0.1 per cent higher, while Sydney was up 0.6 per cent.

But Hong Kong and Shanghai each slipped 0.5 per cent, while Seoul was off 0.3 per cent and Singapore gave up 0.1 per cent. Taipei fell 0.6 per cent.

The pound managed to hold its gains after bouncing on news Tuesday that British consumer inflation spiked to a near four-year high of 2.9 per cent in June.

The reading comes as the Bank of England concludes its own policy meeting Thursday and will put pressure on the policy board to hike rates within its two percent target. British inflation had held close to zero throughout 2015 - but has surged since then as a weak Brexit-hit pound raises import costs.

The pound on Friday tumbled to a seven-week low at US$1.2636 in the wake of Thursday's election result that saw the ruling Conservatives lose their majority, days before it begins crucial talks on leaving the EU.


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