Asian markets rose Monday on hopes that the Federal Reserve would re-evaluate its hawkish stance at a meeting later this week, following signs of slower global growth.
Japan’s Nikkei 225 index NIK, +0.62% added 0.6% and the Kospi SEU, +0.08% in South Korea gained 0.1%. Hong Kong’s Hang Seng HSI, +0.14% was up 0.1% while Australia’s S&P ASX 200 XJO, +1.00% was 0.9% higher. Shares were higher in Taiwan Y9999, +0.14% and Singapore STI, +1.12% but fell in Indonesia JAKIDX, -0.13% .
The Shanghai Composite index SHCOMP, +0.16% rose 0.1% while the smaller-cap Shenzhen Composite 399106, -0.31% fell 0.4% ahead of this week’s China’s Central Economic Work Conference, where policymakers are expected to maintain a proactive fiscal policy and commitment to supply-side reforms.
Among individual movers, SoftBank Group 9984, +0.52% rose ahead of the anticipated IPO of its mobile unit later this week, while Samsung Electronics 005930, +0.51% gained more than 1%. Hong Kong-listed casino companies Wynn Macau 1128, -1.09% and Galaxy Entertainment 0027, -1.66% slid, as did stocks of Australian banks such as ANZ Banking Group ANZ, -1.57% .
On Friday, weak economic data from China and Europe fueled worries about the global economy, dragging shares to eight-month lows. Sentiment was also dampened by the mess surrounding Britain’s impending departure from the European Union. The S&P 500 index SPX, -1.91% gave up 1.9%t to 2,599.95, its lowest close since April 2. The Dow DJIA, -2.02% slipped 2% and the Nasdaq composite COMP, -2.26% was 2.3% lower. All major U.S. indexes have fallen more than 10 percent from their record highs, reaching a mark known on Wall Street as a “correction.” Markets are awaiting the elusive “Santa Claus rally,” which usually makes December the best month of the year for stocks.
The Federal Open Market Committee is expected to raise its short-term interest rate — a benchmark for many consumer and business loans — by a modest quarter-point to a range of 2.25% to 2.5% after a meeting on Wednesday. This would be its ninth hike since late 2015. Markets will be watching any policy statement changes and a news conference by Chairman Jerome Powell. The central bank forecasts three more rate hikes in 2019, but softer global growth could cause a shift in its hawkish stance. Last week, China announced that its industrial output and retail sales had slowed in November.
“The ‘Santa rally’ which had been hoped for has proven to be frustratingly elusive, and now markets are quite happy, if not desperate, for at least a dovish line to be thrown by the FOMC,” Vishnu Varathan of Mizuho Bank said in a market commentary. Markets are “grasping straws led by hopes that there will be a material dial back of hawkish bias,” he added.
“The upcoming FOMC meeting and China’s policy-setting meeting, has been the most actively discussed topics around the markets this morning,” said Stephen Innes, head of Asia-Pacific trading at Oanda, in a note to clients Monday. “And both events have a smoothing effect on risk sentiment.”
“We should expect a raft of stimulus measures from China policymakers in an attempt to stabilize the domestic economy,” Innes added. “On the Fed front, the market is banking on a dovish hike which should be kind enough to stabilize equity risk sentiment into year end.”
Benchmark U.S. crude CLF9, +0.12% added 12 cents to $51.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.38 to settle at $51.20 in New York on Friday. Brent crude LCOG9, -0.03% , used to price international oils, gained 7 cents to $60.35 a barrel.
The dollar USDJPY, +0.04% strengthened to 113.46 yen from 113.38 yen in late trading Friday. The euro rose to $1.1312 from $1.1306.
