Asian shares dip but on track for weekly gain

23 Dec 2015 | Author: | No comments yet »

Asian stocks gain as Wall Street rises before Fed, dollar stands tall.

Tokyo: Asian stocks gained on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in US interest rates, while the dollar held to large gains made as Treasury yields picked up. Yet analysts warned of nerves ahead of one of this year’s most anticipated market events. “We wouldn’t be surprised if we see our market get sold off towards the close as investors look to close their positions ahead of the US interest rate decision,” said Anthony D’Paul, chief executive of Australian Stock Report. It would be the first US rate hike in nearly a decade, signalling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally.

With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year. The central bank has hinted that it intends to hike rates gradually. “(Fed chair) Yellen should stress data-dependence in following up with further tightening next year and will surely not drop any heavy hints about the timing of the next move. Supporting the greenback, Treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable US consumer price data supported the case for a Fed rate hike.

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