Asian stock indexes were broadly lower on Wednesday after renewed investor concerns about the state of the trade conflict between the United States and China. Also pressuring the markets were concerns about the announcement that is expected from the Federal Reserve later today, as traders wait to see whether the central bank will take a dovish tone. The Fed is widely expected to keep interest rates unchanged after its policy meeting and to announce plans for a program to end its current quantitative easing program.
Chinese indexes saw the steepest declines, with the Shenzhen Composite down 1.66 percent as of 1:59 p.m. HK/SIN. The Shanghai Composite was down 0.70 percent in the mid-afternoon, bouncing back from a slump of more than 1 percent earlier in the session. Hong Kong’s Hang Seng Index was down 0.35 percent while South Korea’s Kospi declined 0.54 percent. Only Japan’s Nikkei 225 was trading higher, up 0.17 percent.
Currency Movements
On the currency markets, expectations of a dovish Fed have pressured the dollarsending the dollar index to a 2 ½ week low on Tuesday. The dollar index was up 0.07 percent in the mid-afternoon in Asia, to 96.45 .DXY. The dollar strengthened against the yen, up 0.14 percent to 111.53. It was also higher against all of its other trading partners. The Australian dollar retreated 0.14 percent against the greenback, while the British pound was down 0.09 percent to trade at $1.3255. The pound had pared gains overnight on concerns that Prime Minister Theresa May’s request to delay the Brexit would be met with challenges from the European Union. The dollar was also buoyed by trade concerns. According to reports from Reuters, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are planning a trip to China next week for another round of negotiations. These expected talks are likely to move markets in the coming trading sessions and to dominate the news even once the Fed announcement is over.