Asian investors edgy about Fed funds rate

Asian investors edgy about Fed funds rate

HONG KONG (Reuter): Asian stocks face a jittery week, anticipating a rise in the U.S. Federal funds rate at the Federal Open Market Committee (FOMC) meeting on Tuesday.

Asian markets are expected to be weak due to concerns about interest rates, which caused the U.S. Dow Jones index to fall this past week. The index fell 15 points on Friday to 6805 although rate fears weren't seen as a major factor for the day.

But the rate jitters are expected to be exacerbated in Asia by local factors ranging from Taiwan's ban on all pork exports due to an outbreak of deadly hog foot-and-mouth disease to continued gloom in Singapore because of poor export figures.

Hong Kong: Share prices have taken a beating over recent weeks due to uncertainty over whether the U.S. interest rates will go up, but analysts said stocks could move higher once Tuesday's FOMC meeting is out of the way.

The blue-chip Hang Seng Index fell 247.23 points, or 1.94 percent, in the past week to close at 12,489.30 on Friday.

"If they announce a 25 basis point rise, Hong Kong will probably recover to around the 13,000 level because I think it (selling) is just overdone," said ING Barings sales director James Osborn.

Analysts said earnings growth was strong and that, whatever the Fed meeting brought, the uncertainty would be cleared and investors could focus on local fundamentals.

Tokyo: Stocks are expected to plough higher as investors try to ensure the indices finish the fiscal year ending March 31 on a positive note, brokers said.

"Hopes that the government plans to revive the stagnant property market will provide psychological support and the start of a new trading month will make it easier -- for dealers especially -- to buy," said Hisao Suzuki, Yamaichi Securities Co Ltd deputy general manager.

The 225-share Nikkei benchmark index closed up 139.45 points, or 0.75 percent, at 18,633.16 on Friday, capping a five-session winning streak in which it gained 3.5 percent.

Taipei: Taiwan share prices are expected to consolidate in the week beginning March 24 following Taiwan's ban on all pork exports due to an outbreak of hog foot-and-mouth disease.

The ban sent the island's food and livestock shares tumbling on Friday. Brokers said food shares can expect more losses and recent government attempts to cool what is seen as an overheated stock market will also dampen sentiment.

The weighted index plunged 262.60 points to 8,230.07 on Friday, compared to an 8,275.57 finish a week earlier.

Singapore: Share face an uncertain week with no signs of encouraging news to lift the market, dealers said.

"The outlook is uncertain for the week ahead -- what could be out there to lift us?" said one broker, demoralized by a week which saw Singapore's main index hit a series of new lows.

The key Straits Times Industrials Index ended at 2,068.48 on Friday, down 66.98 on the previous week's close. It was battered by poor non-oil domestic export figures, worries over U.S. interest rates and disappointing corporate results.

Seoul: Failures among affiliates of the Sammi Group are expected to hit the Seoul stock market, brokers said.

They said Sammi's woes, and worries that liquidity would be tightened in response, sparked fears of more defaults by smaller companies, which are seen as vulnerable to tight credit.

The composite stock index closed on Friday at 627.08, 14.45 points, or 2.25 percent, lower than the previous Friday.

Bangkok: Thai stocks are expected to gain slightly on expectations of improvements in key economic data to be released on Thursday, brokers said.

Investors believe certain economic data such as the current account and balance of payments would improve, but concern about U.S. interest rates would weigh on sentiment, brokers said. The Stock Exchange of Thailand (SET) index rose 1.03 percent in the week to close at 702.10 points on Friday.

Kuala Lumpur: Malaysian stocks will focus on the FOMC meeting and Wall Street's response, analysts said.

But the market had already factored in a rate hike and could very well rise on the actual news itself, said one analyst.

The benchmark Composite Index of 100 large-capitalized stocks fell 29.53 points, or 2.38 percent to 1,212.94 on Friday against the March 14 close of 1,242.47.

Manila: Philippine shares are expected to stay stuck in a range s most investors would remain cautious ahead of the FOMC meeting and long Easter weekend, brokers said.

Local shares drifted 33.14 points, or 1.03 percent, downward last week to settle at 3,201.65 points on Friday.

Sydney: Australian shares are seen focused tightly on U.S. markets, with all eyes on a possible U.S. interest rate rise and the Dow's response.

The All Ordinaries index closed at 2,386.4, down 36.8 points or 1.5 percent for the week on increasing jitters about U.S. stocks, which are seen here as overvalued, and U.S. bonds.

Wellington: New Zealand shares ended strongly on Friday, rising 17 points after a poor week. Brokers said that although the gain was welcome, the New Zealand market lacked direction and all eyes are on the meeting to decide U.S. interest rates.

The NZSE-40 closed at 2,229.79, just 3.19 points, or 0.14 percent, higher than its 2,226.60 finish the previous Friday.

Dhaka: Stocks suffered a record loss over the past week amid selling pressure triggered by the news that the country's power crisis was hurting the economy, brokers said.

But analysts said the market could recover as many investors might return to snap up now-cheaper stocks. The Dhaka Stock Exchange benchmark index lost 249.82 points or 16.39 percent to 1,273.85 in the week to Thursday.