Asia-Pacific Shares Called Higher, but Gains Could Be Muted by Fed Policy Uncertainty

The major Asia-Pacific shares are expected to open higher on Monday, following Friday’s Wall Street performance. The price action could be muted, however, due to uncertainty ahead of the start of a two-day Federal Reserve monetary policy agreement.

U.S. stocks closed modestly higher at the end of a listless week marked with few market-moving catalysts and persistent concerns over whether current inflation spikes could linger and cause the U.S. Federal Reserve to tighten its dovish policy sooner than expected.

A broad gauge of Asian shares rose on Friday as investors looked past rising U.S. consumer prices and focused on one off-factors which suggested higher inflation could be short-lived.

Cash Market Performance

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 28948.75, down 9.83 or -0.03%. Hong Kong’s Hang Seng Index finished at 28842.13, up 103.25 or +0.36% and South Korea’s KOSPI Index closed on 3249.32, up 24.68 or +0.77%.

In China, the benchmark Shanghai Index settled at 3589.75, down 21.11 or -0.58% and in Australia, the S&P/ASX 200 Index finished at 7312.30, up 9.80 or +0.13%.

Japanese Shares End Lower as Cyclical Stocks Drag; Toshiba Slips

Japanese shares ended marginally lower on Friday as losses in cyclical stocks, as well as banks and property firms, offset gains in heavyweight technical firms.

Toshiba Corp shed 1.59% after an explosive investigation released on Thursday found the company and the government colluded to lean on foreign investors to fall in line with management’s wishes.

Some market participants doubt Japan’s economy will recover as quickly as that of the United States and other advanced nations, as the country grapples with a fourth wave of the pandemic.

South Korean Stocks Extend Gains for Fourth Week as Inflation Fears Ease

South Korean shares closed higher on Friday, tracking overnight gains in Wall Street as inflationary concerns eased ahead of the U.S. Federal Reserve policy meeting next week.

The benchmark index ended the week up 0.29%, extending the buying spree to a fourth straight week. Among the heavyweights, technology giant Samsung Electronics ended flat, while peer SK Hynix rose 4.07%. Battery maker LG Chem added 5.33%.

In other news, the Bank of Korea will start normalizing its loose monetary policy in an orderly manner once the economy is seen on track for a solid recovery, the central bank’s governor said.

Australia Shares Rise for Fourth Week as U.S. Inflation Worries Cool

Australian shares ended at a record high on Friday, supported by tech stocks and gold miners, and notched up a fourth straight weekly gain as investors bet spiking U.S. inflation would be temporary as predicted by the Federal Reserve.

Gold stocks were the best performers, jumping 3.4% and marking their best session since May 7, as bullion prices edged above $1,900 per ounce. On Australia’s gold sub-index, Newcrest Mining gained 3.1% to mark its best session in over a month, while Bellevue Gold added 7.8%.

Technology stocks ended at a five-week high, tracking overnight gains on the tech-heavy NASDAQ.

National Australia Bank (NAB) posted a 3.8% weekly loss, recording its worst week since late October last year, as the lender is under investigation for suspected breaches of anti-money laundering laws.