Stock markets extended their gains in Asia early Wednesday, as global technology shares staged a recovery ahead of the U.S. Federal Reserve’s decision on interest rates.
Korea’s Kospi IT subindex was up 0.5% in morning trade, with heavily weighted Samsung 005930, -0.13% adding 0.3%. The benchmark Kospi SEU, -0.23% was flat, however, after posting gains early in the session. In Japan, some electronics stocks rose about 5%, outpacing the Nikkei Stock Average’s NIK, +0.20% 0.4% rise.
“Market sentiment seems to have relatively stabilized with a rebound in [the] U.S. stock market, especially for the technology sector tickets which had been beaten down in the previous sessions,” analysts at OCBC Bank said in a note.
The steep declines among key technology names on Friday and Monday came amid investor concerns about valuation levels given the sector’s long winning streak since the start of the year. Nonetheless, strong corporate earnings led many investors to view the pullbacks as buying opportunities, analysts say.
The Federal Open Market Committee in the U.S. is set to make a decision on interest rates later in the global trading day. According to CME Group data, almost all market participants believe the Fed will raise interest rates, which is typically good for bank margins.
Still, the rising regional momentum was limited by investor caution ahead of the Fed’s decision.
“We anticipate that the statement will be altered to indicate that the FOMC will begin to reduce the balance sheet later this year if conditions evolve as expected,” said Société Générale, which expects the Fed to raise the funds rate by a quarter of a percentage point to a range of 1.00%-1.25%.
In China, the Shanghai Composite Index SHCOMP, -0.58% was down 0.3%, amid market concerns for heightened Chinese regulatory scrutiny after media reports that the chairman of high-profile Chinese financial firm Anbang Insurance Group was in trouble with the government.
Late Tuesday, Anbang said its chairman, Wu Xiaohui, can’t perform his duties temporarily and has turned them over to other executives. A company spokesman declined Wednesday to provide comment beyond the statement.
Meanwhile, in currencies, the U.S. dollar was roughly flat against the yen, with the dollar last at ¥110.03. Still, record-high levels for U.S. stocks and the recent weakening of the greenback — especially against the euro — could allow Fed officials to keep tightening at a steady pace, ultimately a positive for long-term dollar strength.
In commodities, oil futures extended the late-U. S. selloff in early Asian trading as investor worries about surplus inventories persisted. Nymex oil futures were recently down 1.2% in Asia at $45.90 a barrel, while Brent was off 0.9% at $48.27.