Asian Stocks Drop Before Trump Speaks as Fed Rate Hike Looms

  • Donald Trump to address Congress Tuesday on spending plans
  • Japan’s Topix pares earlier gains as investors shun risk

Markets, Americans Await Trump's Budget Details

Asian stocks fell ahead of President Donald Trump’s address to congress on his economic plans before a potential Federal Reserve interest rate increase next month.

The MSCI AC Asia Pacific Index retreated 0.2 percent as of 4:28 p.m. in Hong Kong, poised for its third day of declines and paring its monthly gain to 1.9 percent. Hong Kong’s Hang Seng Index fell for a fourth day, leading losses in the region. Japan’s Topix rose for the first time in four days as infrastructure equipment makers gained. While Trump is expected to propose boosting defense spending, investors are also looking for details of his other plans at the address scheduled at 10 a.m. Hong Kong time on Wednesday.

“Investors are likely to look for guidance with regards to tax reforms, infrastructure spending plans, trade policy and perhaps further clarification of contradicting comments over labeling China as currency manipulator,” Saktiandi Supaat, an analyst at Maybank Investment Bank wrote in a report Tuesday.

U.S. policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations, according to Fed Bank of Dallas President Robert Kaplan. Traders are pricing in a 50 percent chance of a rate hike at the Fed’s March 14-15 meeting after the comments, from 34 percent a week ago.

China PMI data is expected to show continued expansion, while India and Australia will report fourth-quarter economic growth figures this week. Fed officials including Chair Janet Yellen are expected to speak in Chicago at the end of the week.

Doosan Heavy Industries and Construction Co. fell 7.7 percent in Seoul after announcing a plan to sell bonds with warrants. The proposal will be a “short-term burden,” according to Kim Hong-Gyun, an analyst at Dongbu Securities. VietJet Aviation Joint Stock Co. surged by the daily limit in its trading debut in Vietnam as travel demand soars in the country.

SUMMARY

  • Japan’s Topix +0.1%, Nikkei +0.1%
    • Yen +0.3% to 112.35 per dollar
    • Komatsu +1.8%, Nomura +1.2%, Mizuho +0.6%
  • Hang Seng Index -0.8%, HSCEI -0.3%, Shanghai Composite +0.4%
    • AIA Group -2.1%, Tencent -1.5%, China Mobile -1.1%
  • Kospi +0.3%
    • Samsung Electronics +1%, Hyundai Heavy +5.1%
  • ASX 200 -0.2%
  • Singapore’s Straits Times Index -0.3%; Jakarta Stock Exchange Composite Index +0.2%, Malaysia’s KLCI Index -0.1%, Thailand’s SET Index +0.1%, Philippines Stock Exchange PSEi Index -0.3%, Vietnam’s Ho Chi Minh Stock Index -0.9%, India’s S&P BSE Sensex Index -0.1%
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