CM – Asian stocks mixed as investors await key central bank decisions

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FILE PHOTO: People are reflected in a listing board in front of a brokerage house in Tokyo, Japan, April 18, 2016. REUTERS / Toru Hanai

SYDNEY: Asian stocks were mixed on Tuesday and currencies held in tight ranges, as nervous investors awaited several key central bank meetings that could set the tone for risk appetite next year.

MSCI’s valuation of Asia Pacific equities outside of Japan rebounded 0.8%, up 0.8% around 0128 GMT, with Japan’s Nikkei 0.2% lower and the Australian S&P / ASX 200 declined 0.6%.

The immediate focus was on Tuesday’s meeting of the Reserve Bank of Australia (RBA) that saw the Federal Reserve and the bank of England will record their policy decisions later this week.

« All eyes are on the RBA for us, » said Adam Dawes, investment advisor at Shaw and Partners Ltd in Sydney.

« We anticipate the language will definitely change to accommodate rate hikes or at least pull back quantitative easing. »

A decline in the RBA’s main monetary policy measure, aimed at extremely low short-term interest rates, would signal a change in the bank’s cautious stance and could be a preamble to the Fed meeting that markets are expecting to begin the curb on bond purchases.

Australian government bonds fell, and the benchmark 10-year yield rose five basis points to 1.973 percent before the RBA was announced at 330 GMT after the session.

Chinese stocks opened slightly lower, with local blue chips down 0.09 percent, while the Hong Kong benchmark gained 1.8 percent. South Korea’s KOSPI index opened 1.50 percent higher.

The Dow Jones Industrial Average rose 0.26 percent after surpassing 36,000 points in intraday trading for the first time. The S&P 500 was up 0.18 percent while the Nasdaq Composite was up 0.63 percent. Currency movements were small in morning trading, with the dollar hovering below recent highs after hitting its biggest daily rise last Friday for more than four months.

The yen was a fraction weaker at 114.11 per dollar and the greenback posted a small overnight loss against the euro.

The Aussie, which was on the domestic for about a week Bond market had sold wildly held at $ 0.7521 despite volatility gauges pointing to a bumpy week.

With inflation rising in financial markets, the RBA is holding a handful of central bank meetings to set the near-term interest rate outlook. </ The swap prices indicate an above average chance of a BoE hike while the RBA is expected to officially a The Fed is expected to approve plans to cut its $ 120 billion monthly bond purchase program to support the economy on Wednesday, while investors also focus on comments on interest rates and the sustainability of the recent spike in inflation "This (Fed meeting) is going to be a relatively big deal," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. "We expect to hear the glide path for tapering bond purchases."

On the commodity markets, another 4 percent drop in Chinese coal prices on Tuesday pushed them 50 percent below the previous month’s record high.

Oil prices leveled higher on Monday as expectations of strong demand and the belief that a key producer group will not turn the taps too quickly helped offset the initial losses from the world’s fuel unleashing reserves largest energy consumer, China.

US crude oil rose 0.2 percent to $ 84.25 a barrel and Brent was trading at $ 84.97, up 0.3 percent.

Spot gold fell 0.1 percent to $ 1,789.99 an ounce. Bitcoin was 0.5 percent higher at $ 61,285.23.

(Reporting by Paulina Duran in Sydney, Katanga Johnson on Washington and Herbert Lash in New York; Editing by Sam Holmes)

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