(Bloomberg) — Asian shares struggled for direction after Wall Street edged lower, with all eyes on the Federal Reserve’s final policy decision of the year.
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Japan’s Nikkei 225 Index slipped while the Topix gauge edged higher. Benchmarks in South Korea and Australia rose. Futures point to gains in Hong Kong. US contracts were marginally lower after both the S&P 500 and Nasdaq 100 shed 0.4% Tuesday.
Shares of Nissan Motor Co. rose as much as 24%, the most since at least 1974, on news the ailing carmaker is exploring a possible merger with Honda Motor Co. The latter’s stock dropped.
Bloomberg’s dollar gauge was steady. The yen weakened a tad ahead of the Bank of Japan’s policy decision Thursday. Treasuries were little changed in Asia.
With the Fed is widely expected to cut interest rates by another 25 basis points later Wednesday, the focus is on its outlook for next year given Donald Trump’s proposed policies that may rekindle inflation. The central bank’s meeting also comes as US economic data showed a mixed picture, with retail sales increasing at a firm pace and industrial production unexpectedly declining.
Asian stocks opened “with a slightly negative bias this morning, with the drop in cyclicals overnight auguring poorly for the region,” said Kyle Rodda, a senior market analyst at Capital.Com. “Ultimately, the next move for equity markets depends on what happens at the FOMC meeting, with a so-called Santa rally living and dying on the central bank’s commentary, guidance and projections.”
Bank of America Corp. sees the Fed lowering interest rates to the 3.75% level — or three more cuts from where they are currently, Chief Executive Officer Brian Moynihan said on Bloomberg Television.
“They need to bring it down a little bit, they just have to be more careful because the economy is stronger than we thought three months ago, six months ago but still has potential weaknesses” he said. “We haven’t even talked about what is going on outside the United States that could affect it — not tariffs but wars.”
Back in Asia, Chinese chipmaker shares will grab attention on news that the US is set to initiate a trade investigation into the country’s semiconductors in the coming days. Meanwhile, Indonesia’s central bank is scheduled to announce its policy decision later Wednesday, after the nation’s anti-graft agency searched its headquarters as part of a probe into the monetary authority’s use of corporate social responsibility funds.