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Asian Shares Little Changed as Investors Await Cues From the Fed--Update

14 Mar 2017 4:46 am
By Kenan Machado 

Investors widely kept their trading on hold, eschewing notable buying or selling ahead of the Federal Reserve's meeting this week.

Though an interest-rate increase Wednesday is almost universally anticipated, market players are waiting to see whether the Fed offers a signal about the pace of further tightening this year.

But investors are buying India after a holiday on Monday. Apparently heartened by the landslide victory for Prime Minister Narendra Modi's Bharatiya Janata Party in India's most-populous state, the S&P BSE Sensex gained 1.6% while the rupee hit its best level in a year versus the dollar.

Equities in South Korea are also higher, continuing the strong run that began with the confirmation Friday of former President Park Geun-hye's impeachment. Coming off its best two-session performance in two months to reach the highest levels since May 2015, the Kospi stock index is up a further 0.7%. Heavyweight Samsung Electronics rose 1.5% to a fresh record.

Also helping sentiment was news that U.S. President Donald Trump and Chinese counterpart Xi Jinping plan to meet next month. Tensions between China and South Korea have risen since the latter agreed to host a U.S. antimissile system.

"Trade and diplomacy and going to be much-bigger issues" in the planned talks, said Frank Benzimra, head of Asia equity strategy at Société Générale.

Shares of Korean export- and tourism-reliant companies, which had weakened of late as tensions grew between Seoul and Beijing, continued to rebound Tuesday. Korean Air Lines climbed 3.9% and Asiana gained 1.5%.

Most other Asian stock markets were more muted.

"New money coming into shares looks difficult" ahead of the Fed releases Wednesday, said Andrew Sullivan, a managing director at Haitong International Securities in Hong Kong.

Most major indexes were within 0.2% of Monday's closing levels, with benchmarks in Japan and Australia down slightly while ones in Hong Kong and China were up fractionally following generally upbeat economic data from the mainland.

Recently roughed-up oil and the dollar were also little changed in Asian trading Tuesday after modest movements overnight. The dollar recently fetched Yen114.80, compared with Yen114.87 late Monday in the U.S.

Stocks globally this month have generally shown some comfort with tighter U.S. interest-rate policy. Some analysts say that could risk sending signals of tolerance about a hawkish Fed.

More rate increases are liable to result in an even-stronger dollar, which could hurt U.S. corporate earnings, noted Keith Wade, the chief economist and strategist at asset manager Schroder Investment. That, ultimately, could help lead to a market correction.

Debiprasad Nayak contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

March 14, 2017 00:46 ET (04:46 GMT)

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