Asian markets muted ahead of central bank announcements

Asian stock markets were largely flat on Monday (Oct 30) as investors locked in gains on earnings reports and braced for key Japanese and US central bank announcements.

In Tokyo - where the Nikkei cooled but still reached its best level in 21 years - the focus is on a two-day Bank of Japan policy meeting that started Monday.

The US Federal Reserve begins its two-day meeting on Tuesday, with President Donald Trump expected to announce the Fed's next chair by Friday before he embarks on an 11-day Asia tour.

Neither meeting was expected to result in an immediate rate rise, with inflation low in each country, but investors were watching with caution.

With the earnings season in full swing, Tokyo stocks ran out of steam to close virtually flat Monday, while Hong Kong ended the day 0.4 per cent down.

Shares in banking giant HSBC briefly rose on news that profits had leapt fivefold in the third quarter to US$4.6 billion on booming Asian business and a huge restructuring drive. But they settled back on profit-taking.
Gaming giant Nintendo nearly doubled its full-year profit forecast as it pointed to sizzling sales of its Switch games console and a cheaper yen, but shares ended slightly down.

Crisis-hit Kobe Steel, reeling from a quality data-faking scandal, downgraded operating profits Monday, but saw shares jump 2.2 per cent after the Nikkei business daily reported Japanese banks were preparing billions of dollars in loans for the steelmaker.

Shanghai tumbled 0.8 per cent, as Chinese traders returned to full activity after a steady trading week which also featured the Communist Party congress.

"The market tumbled today, partly because increased yields on China's 10-year government bond over the last week shook sentiment to some degree," said Li Daxiao, an analyst with Yingda Securities.

"But the drop in the market also helped release the risks accumulated during a week of relatively steady trading."

The dollar eased off slightly in Asian trade following gains against the euro last week, when the European Central Bank said it would soon start to taper its monetary stimulus programme.

Europe's stock markets diverged in opening deals on Monday, with London dropping 0.3 per cent and Paris down 0.1, while Frankfurt edged up 0.1 per cent.

BUSY US CALENDAR

Wall Street closed with gains on Friday on blowout earnings from tech giants, as well as strong third-quarter economic growth figures which overshot forecasts.

The figures showing Trump hitting stated growth targets were also a boost to advocates of his tax reform plans, further fuelling investor sentiment.

Investors will have plenty more to digest this week with an extremely busy US schedule of events, including the Federal Reserve meeting and key data such as the October jobs report.

Trump is expected to announce this week whether he will replace Federal Reserve chair Janet Yellen, who over the weekend described moribund US inflation over the last year as a "mystery", a "surprise" and a "concern".

Centrist Jerome Powell appeared to edge ahead as front-runner at the weekend, presenting the possibility of a continuity candidate unlikely to rattle foreign exchange rates. But he would be a blow to hawks who favour rate rises sooner rather than later.

The Fed is considered unlikely to raise interest rates at this week's meeting, but the expectation remains of an increase in December.

- Key figures around 0830 GMT -

Tokyo - Nikkei 225: FLAT at 22,011.67 (close)

Shanghai - Composite: DOWN 0.8 per cent at 3,390.34 (close)

Hong Kong - Hang Seng: DOWN 0.4 per cent at 28,336.19 (close)

London - FTSE 100: DOWN 0.3 per cent at 7,485.05 (open)

Euro/dollar: UP at US$1.1627 from US$1.1604 at 2100 GMT Friday

Pound/dollar: UP at US$1.3166 from US$1.3131

Dollar/yen: UP at ¥$113.70 from ¥113.67

Oil - West Texas Intermediate: UP 11 cents at US$54.01 per barrel

Oil - Brent North Sea: UP 35 cents at US$60.72 per barrel

New York - DOW: UP 0.1 per cent at 23,434.19 (close) 

Source:AFP