Asian stocks ease as early rate cut bets diminish

by Jonathan Adams

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.09% on Wednesday

Asian stocks eased on Wednesday as diminishing hopes of early interest rate reductions from the U.S. Fed sapped risk appetite, with investors looking to the minutes of the central bank’s last meeting for clues on the policy outlook.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.09% on Wednesday. Japan’s Nikkei eased 0.21%, having stuttered in the last few days within sight of the all-time high hit in 1989.

China stocks were mixed in early trading, a day after the biggest ever cut in the nation’s benchmark mortgage rate as authorities stepped up efforts to boost the ailing property market.

On Wednesday, the blue-chip CSI300 index declined 0.6%, while Hong Kong’s Hang Seng Index was up 1%.

China’s stock exchanges on Tuesday said major quant fund Lingjun Investment had broken rules on orderly trading and barred it from buying and selling for three days, as part of broader regulatory measures to revive market confidence.

While analysts welcomed the big mortgage rate reduction they said more steps are required to help turn sentiment around.

I think we should be used to the People’s Bank of China’s step-by-step behaviour by now, Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis told the Reuters Global Markets Forum.

So everything comes later than expected and in bits and pieces, she added.

On the monetary policy front, traders will get a chance to evaluate minutes of the Fed’s last meeting later in the day for any further clues on when the central bank will start its easing cycle.

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