Asian stocks mixed as investors await Fed decision; Japan hovers near record highs
Asian shares traded mixed on Wednesday as investors remained cautious ahead of the U.S. Federal Reserve’s policy decision later in the day. Meanwhile, Japanese stocks stayed near record highs after trade data showed the country’s deficit narrowed less than expected.
Regional sentiment mirrored Wall Street, where U.S. benchmarks closed slightly lower on Tuesday. Futures tied to the indices were little changed in early Asian hours.
Fed decision in spotlight
The Fed is widely expected to cut rates by 25 basis points on Wednesday, bringing the federal funds rate to 4.00%-4.25%. Markets have already priced in the move, but investors are focused on updated economic projections and Chair Jerome Powell’s comments for clues on the pace of future easing.
Fed funds futures suggest 65 to 70 basis points in cuts by year-end. However, policymakers may adopt a more cautious tone if inflation pressures persist. Analysts at ING noted that attention will also be on the Fed’s voting breakdown, with Stephen Miran participating for the first time.
Lower U.S. rates generally support capital flows into Asia and ease pressure on regional currencies.
Regional market moves
Hong Kong’s Hang Seng index jumped 1.5% on Wednesday, led by tech sector gains. Sentiment was also lifted by Chief Executive John Lee Ka-chiu’s policy address, which reaffirmed Hong Kong’s 2025 growth forecast of 2%-3% and outlined measures to improve housing, wages, elderly care, and opportunities for youth.
China’s CSI 300 rose 0.6%, while the Shanghai Composite added 0.4%, keeping close to decade-high levels.
South Korea’s KOSPI slipped 0.7% after six consecutive sessions of record highs. Australia’s S&P/ASX 200 also fell 0.7%, while Singapore’s Straits Times Index edged down 0.2%. In India, the Nifty 50 opened 0.3% higher.
Japan’s trade data supports Nikkei near record highs
In Tokyo, the Nikkei 225 held steady just below Tuesday’s record peak of 45,055.0 points, while the broader TOPIX index slipped 0.6%.
Japan’s August trade data showed resilience despite tariff headwinds. Exports declined only 0.1% year-on-year, far less than expectations of a 1.2% drop, while imports fell 5.2%. This left a trade deficit of 242.5 billion yen ($1.64 billion), narrower than the 325 billion yen forecast.
Exports improved after the U.S. and Japan finalized a trade deal capping tariffs on Japanese goods at 15%. Still, domestic demand remained under pressure from high import costs and persistent inflation.
