Asian equity weighs on caution as Fed events gain prominence By Reuters

By Swati Pandey and Wayne Cole

SYDNEY (Reuters) – Asian stocks were set aside on Wednesday as worries over the global recession and endless trade wars were struggling in the hopes of further monetary and fiscal stimulus for maintain growth.

That largely depends on what the Federal Reserve does with US interest rates, which makes the markets extremely sensitive to the minutes of the most recent meeting scheduled for next Wednesday.

Traders are also waiting for the annual Central Bank seminar at Jackson Hole later this week and the Group of Seven summit this weekend for information on additional measures that policymakers will need to take to boost economic growth.

Morgan Stanley Ellen Zentner (New York Stock Exchange economist), Ellen Zentner, advised clients to monitor the use of the word "a little" when Fed Chairman Powell described new policy adjustments.

"Acknowledging that the downside risks have risen without being labeled" a little bit "could be considered a confirmation that the Fed is likely to make a bigger cut in September, writes Zentner in a note.

Futures prices are fully planned for a quarter-point rate cut next month and a more than 100 basis point easing by the end of next year.

With so much on the Fed, investors were naturally worried. The widest index of MSCI Asia Pacific shares outside Japan shook on both sides after three consecutive days of gains.

Japan fell by 0.3%, while that of Shanghai edged up 0.06%. E-Mini futures, which rallied 0.3%, performed slightly better, while EUROSTOXX 50 futures rose 0.1%.

Political unrest in Hong Kong, Britain and Italy has also increased uncertainty for investors. The prospect of new elections in Italy after the resignation of Prime Minister Giuseppe Conte has heightened concerns, dragging yields of Italian sovereign bonds.

The largest e-commerce company in China Ali Baba (NYSE: 🙂 Holding Group has delayed its listing of $ 15 billion in Hong Kong because of political turmoil, said two people aware of the case to Reuters.

President Donald Trump has again shown no signs of retreating into his tussle with China, declaring Tuesday that a confrontation was necessary even if it was causing short-term damage to the economy. US.

His energetic remarks came hours before his government announced the approval of a $ 8 billion sale of Lockheed Martin (NYSE 🙂 F-16 fighters heading to Taiwan, a decision that will surely anger Beijing and reduce the prospects of a quick trade deal.

MORE STIMULUS

Alarms began to ring last week as yields on 10-year US bonds fell below the two-year yields for the first time since 2007, a reversal that predicted previous recessions and is largely followed by markets.

It was enough to urge Trump and his advisers to look at ways to revive the US economy, if at all.

In addition, the central banks of the Eurozone, Australia and China are expected to open up the monetary staple even more this year, while Germany is considering a fiscal stimulus package. .

These prospects have led to lower yields. The benchmark stood at 1.57% on Wednesday against a high of 1.625% on Monday.

Forex markets were largely under control before the Jackson Hole meeting and the Fed's minutes. The dollar was a little stronger on the yen at 106.48 after losing 0.4% on Tuesday, while the pound was trading for the last time at $ 1.2150.

The euro has retreated to 1.1090 dollar, just below the week's high of 0.113 dollar. The was a little firmer at 98.213 and not far from a three-week high.

In commodity markets, it strengthened 25 cents to 56.38 dollars a barrel and 32 cents to 60.35 dollars. [O/R]

slipped 0.3% to $ 1,502.12 an ounce.