Stocks gain before Fed decision; FX up as oil market steadies

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Stocks gain before Fed decision; FX up as oil market steadies

Emerging-market stocks gained on Wednesday as investors looked for a U.S. Federal Reserve interest-rate decision, while a drop in oil prices lifted major oil importers.

Stocks were up 0.3 per cent, with mainland China shares among the leaders on expectations of lower borrowing costs at home and the United States.

The People’s Bank of China left its one-year lending rate unchanged on Tuesday, but analysts expect banks to set loan prime rates lower at Friday’s monthly fixing, which would reduce borrowing costs for consumers and companies.

But the main focus was on an expected quarter-point rate cut by the Fed, which would be the second of the year and would set the tone for future monetary policy.

“We are almost certain to see a cut by the Fed today, but it will be the forward guidance to how they will decide future monetary policy that will be in focus,” said Simon Harvey, an FX market analyst at Monex.

South Korea’s Kospi and Taiwan’s TWSE stock indexes rose 0.4 per cent to 0.6 per cent.

Apple component suppliers rallied on strong pre-orders for the latest iPhone.

Hong Kong shares lagged as anti-government protests continued to cast a pall on investor sentiment.

Stocks were little changed in Moscow and down 0.5 per cent in Johannesburg index.

Oil retreat’s emerging-market currency index rose after falling on Tuesday.

Currencies of oil importers recouped their losses and moved higher as crude prices steadied.

Saudi Arabia’s energy minister said the kingdom will restore lost oil production by the end of the month, after a drone attack halved the country’s crude supply.

“It could have been worse for the oil markets, but the reaction from the Saudis has helped contain that and we see crude stabilizing now,” Harvey said.

The Indian rupee and the Indonesian rupiah rose 0.2 per cent to 0.4 per cent.

Turkey’s lira was up 0.3 per cent, but stocks on the Istanbul index fell 0.4 per cent after a Turkish regulator ordered banks to write off 8.1 billion dollar of loans by the end of the year and set aside loss reserves.

South Africa’s rand climbed 0.5 per cent after data showed consumer inflation rose to 4.3 per cent year-on-year in August, from 4.0 per cent in July.