A pedestrian looks at an electronic stock board displaying the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan. Picture: BLOOMBERG/KIYOSHI OTA
A pedestrian looks at an electronic stock board displaying the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan. Picture: BLOOMBERG/KIYOSHI OTA

Hong Kong — Global shares hovered at record highs while currency markets and US treasuries were steady on Wednesday, as investors looked to the expected winding down of pandemic-era monetary stimulus in the world’s largest economy.

The Federal Reserve is expected to announce the tapering of its $120bn/month asset purchase programme in its policy statement at 6pm GMT. Ahead of the much anticipated meeting, Asian shares failed to follow a strong lead from Wall Street.

Markets are almost certain the Fed will taper but are looking to see if policymakers will give any hints about the possibility of interest rate hikes next year.

“While confidence remains that the Fed will begin its taper, there is scepticism around just how hawkish they will be on the rate hike front,” said analysts at Westpac in a morning note to clients.

Federal Reserve officials are trying to maintain a balance between raising rates to ensure inflation remains contained and giving the economy as much time as possible to restore the jobs lost since the pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.33% in early trading on Thursday. Japanese markets were closed for a public holiday.

“The shape of markets in our region may be driven more by what happens to treasury and dollar markets overnight than what happens locally,” Rob Carnell, ING’s Asia-Pacific head of research, said in a note.

The Australian benchmark share index was the biggest gainer , rising 1.3%. But those gains were outweighed by falls in Hong Kong’s Hang Seng off 1%, and South Korea’s Kopsi down 1.2%, even as local fintech Kakao Pay saw its shares double in value from their initial public offering (IPO) price on their trading debut.

Chinese shares were steady after data showed service sector activity expanded in October.

On Tuesday, MSCI’s all-country world index, which tracks equity performance in 50 nations, closed at a record high, helped by all three major US stock indexes hitting intraday peaks during the session, and a record finish from Europe’s Stoxx 600 index.

Strong earnings supported shares in both Europe and North America.

In contrast the Asian regional benchmark has been trending down since early in 2021, and is off more than 13% from its February peak, as it struggles to rebound from sweeping regulatory changes in China in the summer, which roiled sectors from property to technology.

Moves in currency markets were muted on Thursday. The dollar kept within sight of its recent highs against the yen and euro.

The Aussie dollar was steady on Wednesday, having dropped 1.2% against the dollar on Tuesday after more dovish remarks from the Reserve Bank of Australia, even as it abandoned its short-term yield target.

Also in central bank news, the Bank of England on Thursday could become the first of the world’s biggest central banks to raise rates after the coronavirus crisis.

US benchmark 10-year treasury yields were steady at 1.5540%, a little off October’s recent top of 1.7%.

Oil prices fell on Wednesday as industry data pointed to a big build in oil stocks in the US, the world's largest oil consumer, and as pressure mounted on oil cartel Opec to increase supply.

Brent crude fell 1.2% to $83.74 a barrel while US crude tumbled 1.5% to $82.65 a barrel.

Spot gold slipped 0.2%.

Reuters

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