Asian Shares See Cautious Gains Ahead Of Fed Decision

Asian stocks advanced on Wednesday even as a cautious undertone prevailed ahead of the U.S FOMC meeting outcome later in the day.

The Federal Reserve is likely to raise interest rates by another 25 basis points and signal that a pause in rate hikes is on the horizon.

Overnight data showing a slower-than-expected increase in U.S. labor costs helped spur expectations that inflation will ease further in the coming months and eventually pave the way for the Fed to cut rates by year-end.

Chinese shares rose after two manufacturing surveys painted a positive picture of the economy.

While the official manufacturing PMI swung to expansion from a 34-month low in the previous month, the Caixin survey showed that factory activity shrank more slowly than in the previous month.

China’s Shanghai Composite Index climbed 0.9 percent to 3,284.92, while Hong Kong’s Hang Seng Index gained 1.1 percent to settle at 22,072.18.

Japanese shares surrendered early gains to end on a flat note as a survey showed factory activity in the country shrank for a third month in January.

The Nikkei 225 Index finished marginally higher at 27,346.88, while the broader Topix slipped 0.2 percent to close at 1,972.73.

Alps Alpine, Tokyo Gas and Screen Holdings all jumped over 5 percent after announcing their financial results. On the losing side, Epson and TOTO lost 6-8 percent.

Seoul stocks rose sharply after a business survey showed factory activity in the country contracted at a slower pace in January. Investors shrugged off separate data showing that the country’s trade deficit soared to a record.

The Kospi rallied 1.0 percent to 2,449.80, led by chipmakers such as Samsung Electronics and SK Hynix.

Australian markets eked out modest gains, with mining and financial stocks leading the surge. The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,501.70, while the broader All Ordinaries Index ended 0.3 percent higher at 7,709.70.

Flight Centre shares jumped more than 8 percent after the travel giant completed a $180 million placement to fund its purchase of U.K. luxury travel company Scott Dunn.

The manufacturing sector in Australia slipped into stagnation in January, the latest survey from Judo Bank revealed today, with a manufacturing PMI score of 50.0, down from 59.2 in December.

Across the Tasman, New Zealand shares climbed as weak unemployment figures raised hopes the Reserve Bank can moderate its interest-rate hikes. The benchmark S&P/NZX-50 Index gained 1.0 percent to end at 12,090.93.

U.S. stocks rose overnight, and Treasury yields fell as weak labor costs, consumer confidence and business activity data bolstered expectations of the Fed slowing its interest-rate increases.

The Dow climbed 1.1 percent, the S&P 500 jumped 1.5 percent and the tech-heavy Nasdaq Composite added 1.7 percent.

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