Investors on the edge as the Asian market mirrors the cautious sentiment from Wall Street, anticipating the Federal Reserve’s crucial decision on interest rates.
Asian shares were mostly lower on Monday as investors awaited a Federal Reserve decision on interest rates. U.S. futures, however, gained while oil prices fell due to concerns over the Israel-Hamas war. The Israeli military conducted incursions into Gaza, leading to Prime Minister Netanyahu warning of a “long and difficult” war.
Despite a mixed set of economic reports on Friday, Wall Street still expects the Federal Reserve to keep its benchmark rate unchanged at the upcoming meeting. While the Fed’s preferred measure of inflation remained high last month, it was within economists’ expectations. U.S. consumer spending was stronger than expected, but growth in incomes fell short of forecasts.
In Asian markets, Tokyo’s Nikkei 225 index lost 1.3%, and there is speculation that the Bank of Japan may make adjustments to its monetary policy. Over the weekend, more than 30 companies listed in China revealed intentions to conduct share buybacks and purchases after China announced measures to stabilize falling stock prices. The Hang Seng in Hong Kong fell 0.3%, while the Shanghai Composite index rose 0.2%.
Nominal retail sales in Australia rose 0.9% in September, suggesting resilience in consumer spending. However, Australia’s S&P/ASX 200 slipped 0.6%. South Korea’s Kospi added 0.4%, Taiwan’s Taiex edged up 0.1%, and the SET in Bangkok also rose 0.1%.
On Wall Street, the S&P 500 fell 0.5%, entering a “correction” phase, as it is now 10% below its July peak. The Dow Jones Industrial Average fell 1.1%, and the Russell 2000 index of smaller company stocks slipped 1.2%, reaching its lowest level in about four years. The Nasdaq, however, rose 0.4% on the strength of several big technology and communications companies that reported solid earnings.
Amazon rose 6.8% after reporting better-than-expected profit and revenue for the summer. Alphabet, Meta, Tesla, and Ford all fell sharply following their latest reports. Intel, outside the “Magnificent Seven” Big Tech stocks, rose 9.3% after reporting stronger-than-expected profit. Ford stumbled 12.2% after reporting disappointing earnings and revenue.
The yield on the 10-year Treasury has been hovering at levels not seen since 2007, currently at 4.87%. This rise has led to prices tumbling for older bonds already trading in the market. The 10-year yield has been catching up with the Fed’s main overnight interest rate as worries increase about the U.S. government’s debt.
In the oil market, benchmark U.S. oil fell to $84.22 a barrel, while Brent crude slipped to $88.08 per barrel. In currency trading, the U.S. dollar fell to 149.56 Japanese yen, and the euro fell to $1.0563.
Overall, the market remains cautious as it awaits the Federal Reserve’s decision on interest rates and monitors the ongoing geopolitical tensions in the Middle East.