On Wednesday, Asian stocks were mostly higher prior to the beginning of the U.S. Federal Reserve meeting. The market started the week higher with Asian stocks hitting a ten-year high due to geopolitical tensions between the United States and North Korea who has been testing the firing of ballistic missiles over the past month.
The Nikkei 225 was steady on Wednesday and closed 2% higher during the trading session recovering from the losses from the previous market close. Among the best performers in the index was Pioneer Corp whose shares were up by 3.88%. The US Dollar also traded down against the Japanese yen by 0.23%.
South Korea’s Kospi inched down by 0.05% due to the losses stocks from the technology and retailer sector suffered. Hong Kong’s Hang Seng index gained 0.3% to 28,117.50 while the Shanghai Composite index in China rose 0.1% to 3,359.74. In Australia, the S&P/ASX 200 lost 0.2% to 5,701.10.
Following the end of the Federal Reserve’s two-day meeting, the central bank is expected to announce an update to whether it plans to raise interest rates once again before the end of the year. Although most of the markets and other investors are not expecting the Fed to raise interest rates once again, their decision and view regarding raising interest rates are expected to be used by investors to analyze the factors that attribute to their criteria for raising interest rates.
The market currently does not expect the Federal Reserve to raise interest rates which are currently at around 1% to 1.25%. However, the central back is expected to finally announce its plans for winding down or tapering trillion dollar worth of bonds from its asset purchases by October or the cutting down of its balance sheet which is valued at around $4.5 trillion.
Investors have speculated to whether the soft inflation rate has been the major driver in the lack of updates from the Fed regarding the interest rates which was believed by the markets earlier to be increased once more before the end of the year. The Federal Reserve is expected to target a 2% inflation.
Aside from these, the market will be focused on the meeting possibly regarding their economic projections in connection to interest rate forecasts which is known to others as the dot plot.
The Federal Reserve is also expected to give the market an update regarding its economic projections from its board members along with regional Federal reserve presidents which will include whether they have achieved their employment rate targets and whether the jobless rate has subsided.
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