(Bloomberg) — Stocks in Asia snapped a three-day gain with futures for European and US markets steady as traders await more clarity around the economic outlook from the Federal Reserve’s policy decision later Wednesday. Gold rose to a new record.
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A regional Asian share gauge that had risen as much as 0.4% earlier fell into declines. Futures for the S&P 500 and contracts for Europe were little changed after benchmarks slid on Tuesday. Investors have slashed holdings of US equities by the most on record while cash levels jumped, according to Bank of America Corp.’s latest survey.
Uncertainty over President Donald Trump’s economic policies, particularly around trade and tariffs, has spurred fears of a recession. Investors have also been hunting for opportunities elsewhere, with benchmarks in China and Japan rallying in recent weeks.
The Fed is expected to hold interest rates steady and its quarterly dot plot should give investors more insight into the outlook for the economy. Traders will also be focused on Fed Chair Jerome Powell’s press conference and his juggling act between communicating the central bank’s current view of the economy and weighing the potential impact of Trump’s trade policy.
“Amidst a deteriorating economic backdrop caused by tariffs and general trade uncertainty, the markets are looking for the proverbial ‘Powell put,’ hopefully expressed in dovish guidance and a lowered dot plot in the updated Summary of Economic Projections, said Kyle Rodda, a senior market analyst at Capital.com.
Options traders are pricing in a 1.2% move in the S&P 500 in either direction on Wednesday — up from an average of 0.8% for Fed days over the past year, according to data from Stuart Kaiser, Citigroup’s head of US equity trading strategy.
“Historically, Fed days when rates have been left unchanged have tended to see solid gains,” Bespoke Investment Group strategists said.
The yen extended declines against the dollar to an intraday low after the BOJ kept rates steady and signaled concern about the impact of trade tensions on the global economy. Traders also watched Kazuo Ueda’s press conference Wednesday afternoon, where the Governor said that the trend for consumer prices continues to rise, but it’s still below the central bank’s 2% target.
“The BOJ seems to be now factoring in external uncertainties, including tariff risks, into its decision-making. This could reduce the hawkish tilt,” said Charu Chanana, chief investment strategist at Saxo Markets. “In the Trump era, central banks play a less dominant role, so the yen’s impact may not be as pronounced as it was last year.”
Separately, Japan’s exports rose at a faster pace as businesses increased orders ahead of the rollout of higher tariffs in the US.
Indonesian stocks rebounded slightly after mass selloffs triggered circuit breakers and trading halts on Tuesday. The benchmark Jakarta Composite Index is up as much as 1.3%.
Elsewhere in Asia, Chinese banks are slashing rates on consumer loans to record lows as policymakers ramp up stimulus to stabilize growth and counter US President Donald Trump’s tariffs.
Still, China’s stock rally may face a “meaningful correction soon” given its similarities with the 2015 boom and bust cycle, according to strategists at BofA securities.
Shares of Xpeng Inc. declined as its volume guidance came in short of some analyst expectations, while tech firm Xiaomi Corp. fluctuated in Hong Kong after reporting its fastest revenue growth since 2021 on electric vehicles. Anta Sports Products Ltd. shares fell even after sales beat estimates.
Earnings are expected later from the likes of Tencent Holdings Ltd. and Muyuan Foods Co.
The Turkish lira and stocks declined, while yields surged. Istanbul’s mayor, Ekrem Imamoglu, was detained at his home Wednesday morning, a day after Turkish authorities revoked his university diploma in a move that could bar him from challenging Recep Tayyip Erdogan in the next presidential election.
In commodities, oil slipped as broader market weakness and concerns about a global glut of crude overshadowed escalating tensions in the Middle East. Meanwhile, gold extended a record high to around $3,045 an ounce.
Key events this week:
Federal Reserve rate decision, Wednesday
China loan prime rates, Thursday
Bank of England rate decision, Thursday
US Philadelphia Fed factory index, jobless claims, existing home sales, Thursday
Eurozone consumer confidence, Friday
Fed’s John Williams speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:53 a.m. London time
Nasdaq 100 futures rose 0.1%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.2%
S&P 500 futures were little changed
S&P/ASX 200 futures fell 0.2%
Hong Kong’s Hang Seng rose 0.1%
The Shanghai Composite fell 0.2%
Euro Stoxx 50 futures were little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.2% to $1.0927
The Japanese yen fell 0.3% to 149.79 per dollar
The offshore yuan fell 0.1% to 7.2354 per dollar
The British pound fell 0.2% to $1.2981
Cryptocurrencies
Bitcoin rose 1.4% to $83,181.17
Ether rose 1.6% to $1,937.18
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.29%
Germany’s 10-year yield was little changed at 2.81%
Britain’s 10-year yield was little changed at 4.64%
Japan’s 10-year yield advanced one basis point to 1.515%
Australia’s 10-year yield advanced two basis points to 4.42%
Commodities
Spot gold rose 0.3% to $3,043.26 an ounce
West Texas Intermediate crude fell 0.7% to $66.42 a barrel
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck and Richard Henderson.
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