Asian Markets Mixed Ahead of Crucial US-China Trade Discussions, Fed Decisions

The major Asian indexes are trading mixed Wednesday afternoon ahead of the start of high-level U.S.-China trade talks and the U.S. Federal Reserve’s interest rate and monetary policy statement later in the day. Mainland Chinese stocks started lower, but have recovered since the early session weakness. Shares in South Korea and Hong Kong remained firm throughout the session, while gains in Japan were capped.

At 06:00 GMT, China’s Shanghai Index is trading 2590.02, down 4.24 or -0.16%. Japan’s NIKKEI 225 Index is at 20568.97, down 95.67 or -0.46%. Hong Kong’s Hang Seng Index is at 27545.46, up 13.78 or +0.05% and South Korea’s KOSPI Index is trading 2193.75, up 10.39 or +0.48%.

U.S. Federal Reserve Decisions

At 19:00 GMT, the U.S. Federal Reserve will end its 2-day meeting with its interest rate decision and monetary policy statement, followed by a press briefing by Chairman Jerome Powell.

The Fed is widely expected to leave its benchmark interest rate unchanged. Although the expected moves by the central bank are going to be perceived as dovish, Federal Reserve Chairman Jerome Powell is expected to tone down his comments to avoid fueling a volatile response by equity traders.

Investors are looking for the Fed to direct remarks toward the balance sheet, patience and data dependence.

High-Level U.S.-China Trade Talks

In addition to the Fed news, which is not expected to reveal any surprises, investors will be watching out for developments from the high-level trade negotiations between the United States and China. Traders are saying that these 2-day meetings will have an impact on the markets given the recent volatility tied to the economic slowdown in China and its impact on the global economy.

The meetings are expected to start with a ray of optimism after U.S. Treasury Secretary Steven Mnuchin said that if China presents enough trade concessions to President Trump, there’s a chance the administration may lift all tariffs.

“Everything is on the table,” Mnuchin said early Tuesday during an interview on Fox Business Network.

The two day meetings are taking on added importance because they may be the last before a March 1 deadline to get the deal done. President Trump and China’s Xi Jinping gave their officials until March 1 to work out a deal on “structural changes” to China’s economic model. If they fail, Trump has promised to raise the tariff rate on $200 billion in Chinese imports to 25 percent from 10 percent.