Asian stocks stuttered on Wednesday, November 1, 2023, ahead of a keenly-awaited policy decision from the Federal Reserve later in the day.
The yen was stuck near one-year lows against the dollar, keeping markets on edge for possible intervention by Tokyo.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%, with South Korea’s KOSPI and Hong Kong’s Hang Seng down 0.5% each. Japan’s Nikkei 225 was flat, while China’s Shanghai Composite Index rose 0.2%.
Investors are cautious ahead of the Fed’s decision, with expectations high that the central bank will deliver a fourth consecutive 75 basis point interest rate hike in an effort to tame inflation.
A more aggressive rate hike could lead to a sell-off in risky assets, including Asian stocks.
The yen was also in focus on Wednesday, as it remained weak against the dollar. The dollar/yen pair traded at 148.70, near its one-year high of 149.39 hit in October. A weaker yen makes Japanese exports more competitive, but it also hurts Japanese companies that import raw materials.
The Japanese government has been intervening in the currency market to support the yen, but its efforts have had limited success so far.
Some analysts believe that the Japanese government may be forced to intervene more aggressively in the coming weeks if the yen continues to weaken.
Overall, Asian stocks were subdued on Wednesday ahead of the Fed’s policy decision.
The yen also remained weak against the dollar, keeping markets on edge for possible intervention by Tokyo.