Asian stocks uneven as Fed rate decision looms

Asian stock markets were uneven Wednesday as investors awaited a Fed interest rate decision while the yuan sank after index compiler MSCI declined to include Chinese stocks in a key index.

KEEPING SCORE: Japan’s benchmark Nikkei 225 index gained 0.7 percent to 15,973.26 while South Korea`s Kospi edged up 0.1 percent to 1,973.47. Hong Kong’s Hang Seng crept up 0.1 percent to 20,399.30 and the Shanghai Composite Index in mainland China added 1.2 percent to 2,876.55. Australia`s S&P/ASX 200 lost 0.2 percent to 5,192.10. Benchmark fell in Taiwan and Indonesia fell but rose in Singapore and New Zealand.

CHINA INDEX: Shanghai shares were volatile and the yuan slid after MSCI decided to delay including mainland Chinese stocks in its widely followed Emerging Markets Index. The global stock benchmark provider said China needs to do more to make its market more accessible and closer to international standards.

China’s domestic stocks, known as ‘A-shares,’ are open mostly to local investors. Inclusion on MSCI`s index could have attracted more foreign investment as fund managers rebalanced portfolios to reflect the changes.

Following the decision, Shanghai`s benchmark opened about 1 percent lower before reversing those losses to advance strongly while the Chinese central bank set its daily yuan rate 210 basis points lower at 6.6001 to the dollar, the weakest since January 2011.

QUOTEWORTHY: The MSCI decision ‘should have no direct influence on onshore equity markets’ in China, David Qu and Raymond Yeung of ANZ Bank said in a research note. While investment quotas for foreign institutions ‘have been increasing over the past few years, China’s equity market is very domestic. Cross-border flows are expected to have little impact on the domestic market in the near term.’

FED IN FOCUS: The Federal Reserve wraps up a scheduled two-day policy meeting later Wednesday, with a decision on interest rate policy expected after Asian markets close. The U.S. central bank had been expected to raise interest rates but now most analysts are expecting it to stand pat after some weak economic data, including the most recent monthly jobs report, raised some doubts about the recovery in the world’s largest economy.

WALL STREET: Major U.S. benchmarks ended lower. The Dow Jones industrial average fell 0.3 percent to 17,674.82 and the Standard & Poor’s 500 index fell 0.2 percent to 2,075.32. The Nasdaq composite fell 0.1 percent to 4,843.55.

ENERGY: Benchmark U.S. crude oil futures dropped 79 cents to $47.70 a barrel in electronic trading on the new York Mercantile Exchange. The contract dropped 39 cents to settle at $48.49 per barrel on Tuesday. Brent crude, used to price international oils, fell 73 cents to $49.10 per barrel in London.

CURRENCIES: The dollar rose to 106.25 yen from 106.02 yen. The euro edged down to $1.1204 from $1.1214.