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Asian markets ease as all eyes fix on upcoming Powell speech

China’s benchmark Shanghai Composite Index gained 0.01%, Hong Kong’s Hang Seng Index was up 0.31%, and Japan’s benchmark Nikkei 225 closed the day’s session lower by 0.28%.

Markets in Asia curtailed back on activity on Wednesday (August 21, 2019) as investors took their foot off the pedal while they turn their focus to an upcoming speech from Federal Reserve boss Jerome Powell due the end of the week.

The week has seen a resurgence in optimism helped by rising hopes for the Sino-American trade talks after United States (US) president Donald Trump extended an olive branch with the delay of a ban on Huawei purchases and spoke on the revival of discussions with Beijing.

Hong Kong’s Hang Seng Index was up 0.31% at 26,313.84 at 3.30pm local time, a rebound in spite of weeks of anti-government protests in the country. The tepid bounce was also a response in favour of the ‘platform for dialogue’ offered by Hong Kong leader Carrie Lam earlier in the week to work things out with the public.

China’s benchmark Shanghai Composite Index gained 0.01% or 0.33 points, at 2,880.33, while the smaller Shenzhen Composite Index eased 0.09% or 1.50 points, to 1,572.62.

Malaysia and Singapore shares both dipped lower by mid-afternoon. The FTSE Bursa Malaysia Kuala Lumpur Composite Index was down by 0.17% or 2.70 points, at 1,600.05 while the Singapore Straits Times Index eased 0.28% or 8.67 points, at 3,127.31.

Japan’s benchmark Nikkei 225 closed the day’s session lower by 0.28% or 58.65 points, at 20,618.57, while the broader Topix index was down 0.61% or 9.26 points, at 1,497.51.

The talks at the central bankers’ gathering at the end of this week will be closely scrutinized as it will provide clues on the US central bank’s plans for monetary policy going forward. The central bank cut interest rates last month for the first time since the financial crisis.

US president Trump has heaped pressure on the Fed to slash interest rates despite his claims that the US economy was doing ‘tremendously well’. The campaign to slash borrowing costs by a full percentage point is seen an attempt to boost growth.

Some economists have warned that the US is heading towards a recession within two years, as the US treasury bond yield curve – often an indicator to forward projections of the economy – inverted for the first time since 2007 earlier this month.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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