Asian stock markets experienced a decline today as investors approached their trading with caution ahead of the forthcoming Federal Reserve decision on interest rates. In the morning trading session, Japan’s Nikkei 225 decreased by 1.1% to reach 33,177.75, while Australia’s S&P/ASX 200 saw a loss of 0.5% at 7,192.40. South Korea’s Kospi edged down by 0.3% to 2,568.12, and Hong Kong’s Hang Seng slipped 0.5% to 17,835.44. The Shanghai Composite also fell by 0.3% to 3,116.98.
“Market sentiments remained in its usual wait-and-see mode ahead of the Federal Open Market Committee meeting this week,” commented Yeap Jun Rong, a market analyst at IG.
In contrast, the previous day saw marginal gains on Wall Street, with the S&P 500 edging up by 0.1% to 4,453.53, the Dow Jones Industrial Average rising less than 0.1% to 34,624.30, and the Nasdaq composite also adding less than 0.1% to reach 13,710.24.
Traders are currently keeping a close eye on the Federal Reserve’s meeting this week, with predictions indicating a roughly 40% chance that rates might be raised again, either in November or December, as per data from CME Group (NASDAQ:CME).
Investors are also closely monitoring signals regarding next year when they anticipate that the Fed might commence cutting interest rates, a move that typically loosens financial conditions and bolsters markets.
However, concerns persist that rates might need to stay elevated for a longer duration to bring inflation down to the Fed’s 2% target, especially considering the recent spike in oil prices.
Speculation regarding a possible recession lingers despite reports showcasing resilience in the economy and job market. One concerning indicator is the unusual occurrence of shorter-term bond yields, including the two-year, remaining higher than longer-term yields, a sign that has often foreshadowed recessions in the past.
Another warning signal is emanating from the leading economic indicators index, which monitors factors like new orders for manufacturers and consumer expectations for business conditions. According to Doug Ramsey, chief investment officer of The Leuthold Group, a contraction of 3% or more in its six-month annualized rate-of-change has consistently been linked with a recession.
In other market developments, Clorox (NYSE:CLX) experienced a 2.4% drop in its shares following a cybersecurity attack that caused widespread disruptions to its business. Meanwhile, Ford (NYSE:F) and General Motors (NYSE:GM) observed declines in their stocks as a limited strike by the United Auto Workers extended into another day, with Ford falling by 2.1% and General Motors slipping by 1.8%.
Conversely, energy producers’ stocks surged due to rising oil prices, with Exxon Mobil (NYSE:XOM) gaining 0.8%, and Marathon Petroleum (NYSE:MPC) rising by 1.6%.
In energy trading, benchmark U.S. crude oil added 81 cents to reach $92.29 a barrel on the New York Mercantile Exchange, marking a significant increase from its value of less than $70 in July. Similarly, Brent crude, the international standard, rose by 18 cents to $94.61 a barrel.
In currency trading, the U.S. dollar slightly rose to 147.71 Japanese yen from 147.58 yen. The euro, on the other hand, was priced at $1.0687, down from $1.06954.
