By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Chinese and South Korean stocks fell
Wednesday on caution ahead of the Federal Reserve's monetary-policy
decision later in the day, while Japanese shares rallied on a
weakened yen and strong overnight gains on Wall Street.
The Nikkei Stock Average outperformed regional markets by a wide
margin, finishing the morning trading session 1.3% higher at
13,169.97.
The Tokyo benchmark, which traded more than 2% up earlier in the
day, surrendered some gains as the U.S. dollar (USDJPY) pared its
initial advances against the Japanese yen in choppy trading
action.
Australia's S&P/ASX 200 gained 0.4%, and Taiwan's Taiex
added 0.2%.
Their performance followed another triple-digit-point gain for
the Dow Jones Industrial Average (DJI) Tuesday, as the Federal Open
Market Committee began its two-day policy meeting.
On the downside, the Shanghai Composite fell 1.5%, Hong Kong's
Hang Seng Index dropped 0.8%, and South Korea's Kospi also eased
0.8%.
Traders said the FOMC decision and Fed Chairman Ben Bernanke's
press conference later Wednesday will likely remove a key source of
uncertainty that has affected markets of late in terms of how long
the central bank will maintain its $85 billion a month in bond
purchases.
"So, if investors get a completely clear picture of where the
FOMC is heading, bargain-hunting is on," said IG Markets strategist
Evan Lucas.
However, "if the Fed should surprise the market with tapering
talk, all bets are off," he said.
Some other analysts said that even if the Fed doesn't
immediately signal its intention to downsize its
quantitative-easing program -- a key tailwind behind global equity
markets for several quarters -- concerns that it will eventually do
so may still have an impact.
"Although we don't expect the Fed to decide to scale back its
asset purchases today, we do think the prospect of an eventual
tapering will continue to dampen capital inflows into
emerging-market equities in particular, as it undermines investors'
appetite for risk," John Higgins at Capital Economics wrote to
clients.
Stock movers
In Japan, shipping stocks posted hefty gains, with utilities,
steel makers and financials also making strong advances.
Shares of Kawasaki Kisen Kaisha Ltd. (KWHIY) soared 9%, JFE
Holdings Inc. (5411.TO) climbed 4.5%, and Sumitomo Mitsui Financial
Group Inc. (SMFJY) added 4.1%.
Camera manufacturers rose in the wake of a Nikkei newspaper
report that the top eight digital-camera makers are poised to get
on the path to recovery, with majors Canon Inc. and Nikon Corp.
anticipating strong profit growth.
Canon (CAJ) climbed 1.7%, and Nikon (NINOY) gained 1.5%.
In Sydney, shares of News Corp. (NWSA) tumbled 8.5% as the stock
traded following the spin-off of the media group's publishing
assets. The company has retained the group's entertainment
assets.
Meanwhile, the voting shares of New Newscorp Inc. -- the company
which holds the group's publishing assets, including MarketWatch,
the publisher of this report -- was down 45 Australian cents at
A$14.55 ($13.82) in heavy volumes as it began trading for the first
time.
Losses were spread across sectors in Hong Kong, with shares of
China Coal Energy Co. (CCOZY) falling 3%, China Construction Corp.
(CICHY) dropping 1.6%, and telecom China Unicom Hong Kong Ltd.
(CHU) shedding 2.3%.
Shares of heavyweight HSBC Holdings PLC (HBC) slipped 0.6% after
the Hong Kong Monetary Authority Tuesday said it was investigating
HSBC and other banks over the possible rigging of local benchmark
interest rates.
Financial stocks were mostly lower in Shanghai, meanwhile.
Shares of China Citic Bank Corp. (CHCJY) dropped 2%, China Life
Insurance Co. (LFC) fell 1.5%, and Citic Securities Co. (CIIHF)
retreated 1.6%.
Gold miners fell across the region after the precious metal's
futures suffered a sharp price decline in the U.S. amid uncertainty
related to the Fed's monetary stimulus.
Newcrest Mining Ltd. (NCMGY) shed 0.5% in Sydney, Zhaojin Mining
Industry Co. (1818.HK) fell 2.9% in Hong Kong, and Zijin Mining
Group Co. (601899.SH) lost 2.4% in Shanghai.
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