WL: Asia share markets turn cautious as central bank decisions loom
In Frankfurt on Monday, the DAX 30 DAX, +0.09% gained 0.2% at 10.815.08, slightly creeping up after the release of the closely watched German Ifo index for October.
The dollar index, which tracks the U.S. unit against a basket of six rival currencies, was down about 0.2 per cent at 96.691. Japan's Nikkei.N225 dipped 0.1 percent, though remained near a two-month high.
Amid a lack of trading cues, investors are keeping tabs on a two-day US Federal Reserve meeting starting later Tuesday, where policymakers will decide whether to raise near-zero USA interest rates or push the first rate hike in more than nine years towards 2016.
With the Japanese economy struggling to gain traction and inflation tepid, the BoJ is facing calls to ramp up its already vast bond-buying stimulus programme at the end of a two-day meeting Friday.
While shares across most of Asia are at their highest levels since August, overall the MSCI Asia Pacific Index is up 8.9% month-to-date as of Friday's closing, marking its best month since April 2009.
On Wall Street, S&P 500 Index rose 1.1% on friday, to turn positive on the year, while the tech-heavy Nasdaq jumped 2.35%.Technology shares led the way, thanks to gains in Alphabet (GOOGLE), Amazon and Microsoft, after the three companies reported earnings results. The former two hit record highs, while Microsoft rose to a 15-year high. The markets were mostly flat or in the green on 26 October (Monday) in response to the cut in benchmark interest rates by 25 basis points and a half-percentage point reduction in banks' reserve ratio by China. "Mainland investors are cautious".
"The recent rally off the back of speculation that central banks were about to lend their support to markets wasn't unfounded, " said Jonathan Sudaria, night dealer at London Capital Group, in a note. Ahead of the central committee meeting, Premier Li Keqiang said that China has never stated the economy must grow seven% this year, coinciding with remarks by a top central bank official on Saturday that China would be able to keep annual economic growth at around 6-7% over that period. Risk sentiment supported by Thursday's message from European Central Bank President Mario Draghi that the bank stood ready to enhance quantitative easing.
USA shares were also set to open lower, with futures down around 0.1 percent.
The euro rose to $1.1065 from $1.1059 on Monday in New York, although it still remains under pressure after Draghi's comments last week.
The yen added 0.1 percent to 120.93 per dollar on Tuesday. "Markets are now expecting easing from the BOJ", said Takeru Ogihara, chief strategist at Mizuho Trust Bank.
The futures market implied traders see only a 7 per cent chance of a rate hike on Wednesday and a 34 per cent probability of a rate increase at its next meeting in December, according to the CME FedWatch program.
