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South-East Asia stocks-tepid; investors cautious ahead of Fed policy move

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent

Most South-east Asian stock markets traded flat to higher on Wednesday, tracking overnight gains on Wall Street, while investors were cautious ahead of the US Federal’s policy decision expected later in the day. Wall Street edged higher on corporate earnings, and overall, profits at S&P 500 companies are estimated to have risen 13.9 percent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.The Fed, which concludes its two-day meet on Wednesday, is expected to hold interest rates steady but may hint it is on track for an increase in June.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent, while expectations that the Federal Reserve might signal a June rate hike helped lift the dollar. “We’ve already priced in the low probability of a rate hike. Also, we have been tracking gains in the U.S. market. So far, earnings have been positive at their end so we have been taking cues from them,” said Victor Felix, equity analyst, AB Capital Securities. Singapore’s benchmark index, which posted a 21-month closing high on Tuesday, extended the gains with financials outperforming other sectors.

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While DBS Group Holdings Ltd climbed to its highest since July 30, 2015, Oversea-Chinese Banking Corporation Ltd and United Overseas Bank Ltd rose as much as between 1.5 percent and 2 percent. Philippines shares traded flat, as investors awaited lawmakers’ decision on whether to accept or reject Environment Secretary Regina Lopez as their environment minister. Lopez had angered the mining industry after ordering the closure of more than half the mines in the Philippines to protect water resources.

“Basically is an environmentalist, very anti-mining. So I think right now investors, especially in the mining and oil sub-sectors will be watching for that. If she gets confirmed today, we can expect a sell-off in the mining sector, but if she does not get confirmed, I think there will be a rally in the mining sector,” said Felix. Thailand shares edged up 0.2 percent, while Indonesia dipped, with telecoms and financials dragging the index down. Telekomunikasi Indonesia (Persero) Tbk PT slid to a one-week low, while Bank Central Asia Tbk PT slipped up to 0.8 percent.

(Reporting by Christina Martin; Editing by Sherry Jacob-Phillips)