LM:Dollar steady before Fed, China shares gain on growth pledge
Tokyo: Chinese shares rose after Beijing pledged to keep economic growth stable in the second half of the year, while the dollar held onto slight gains as market momentum stalled ahead of the outcome of the US Federal Reserve policy meeting on Wednesday.
European shares were expected to open steady, with London’s FTSE 100 seen up as much as 0.1% and Frankfurt’s DAX indicated flat, while US S&P 500 index futures edged up 0.1%.
The dollar was steady against a basket of major currencies after a 0.2% rise on Tuesday. The dollar index is down 1.5% in July and set to post a second straight monthly loss for the first time since the turn of the year.
The dollar index hit a five-week trough earlier this week as investors bet the Fed would reassure markets that interest rates would remain low for a long time even if it started scaling back stimulus this year.
The Fed will release its post-meeting statement at 11:30 pm, but there will be no news conference by chairman Ben Bernanke.
“Traders globally seem to be in a wait-and-see mode before the outcome of the Fed’s meeting on the timing of quantitative easing tapering,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management in Tokyo.
The Fed is expected to link the start of any tapering to data signals, and markets get two major reports this week to their cues.
US second quarter GDP data on Wednesday is expected to show growth slowed to an annualised pace of 1% in the second quarter from 1.8% in the first, while payrolls data on Friday is forecast to show a fall in the jobless rate.
The European Central Bank and the Bank of England meet on Thursday, and are set to hold policy steady.
The yen added 0.1% to ÂĄ97.910 to the dollar, while the euro was steady at $1.32560 after hitting a six-week high of $1.33025 on Tuesday.
Chinese shares up
China’s CSI300 index rose 0.5% after authorities pledged to keep growth stable in the second half of 2012 while pressing ahead with reforms and restructuring. The index is still down nearly 13% this year.
“The statement made by the Politburo is quite favourable for the property sector,” said Cao Xuefeng, a Chengdu-based head of research at Huaxi Securities.
Asian shares as measured by the MSCI Asia-Pacific ex-Japan index slipped 0.4%. The index is up 2.1% so far this month, on track to end a two-month losing run, though it is still down 5% so far this year.
Japan’s Nikkei share average dropped 1.5% in light trading, giving up some of the previous session’s 1.5% gain. Still, the benchmark is up 31.5% in 2013, underpinned by the government’s aggressive stimulus policies aimed at reviving the world’s third-largest economy.
Of the 54 Nikkei companies that have reported quarterly earnings so far, two-thirds either beat or met market expectations, according to Thomson Reuters StarMine, versus 54% in the previous quarter.
But in a sign that companies are curbing production due to slowing growth in exports, Japanese manufacturing activity in July grew at the slowest pace in four months.
Copper rebounds
In commodity markets, copper prices climbed 1% to just above $6,800 a tonne, rebounding from near three-week lows after dropping 2.1% on Tuesday on concerns about demand in top consumer China.
A Reuters poll found Chinese manufacturing activity may have contracted in July for the first time in 10 months, signalling a protracted slowdown in the world’s second-largest economy. The PMI will be released on Thursday.
Gold gained 0.5%. It is up 8.2% so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, but it is down 20% since the beginning of 2013.
Brent crude prices eased 0.2% to around $106.70 a barrel, extending a 0.6% decline on Tuesday. They are up 4.5% this month, heading for their best monthly gain since August last year.
