Asian stock markets began Wednesday’s session with a modest and cautious advance, as investors held their breath ahead of a crucial policy announcement from the US Federal Reserve.
The market mood was also shaped by the conclusion of trade talks between the US and China, which ended without any substantive agreement, leaving the global trade landscape in a state of continued uncertainty.
A sense of anticipation is palpable across trading floors today. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3%, led by gains for Taiwanese stocks.
This followed a session of mild losses for US stocks as traders braced for a slew of major corporate earnings reports. Australian shares were up 0.7%, while Japan’s Nikkei stock index slid a marginal 0.03%, and Hong Kong’s Hang Seng Index skidded 0.4%.
Investors are preparing for a packed few days of market-moving events. Several central bank decisions are on the docket, along with key economic reports and a fresh wave of corporate earnings, all culminating in US President Donald Trump’s fast-approaching August 1 tariff deadline.
The main event today will be the conclusion of the Federal Reserve’s policy meeting.
The central bank is widely expected to leave its interest rates unchanged, though the decision could see a rare dissent from some officials who are in favor of lowering borrowing costs.
“With labour market conditions near full employment, most Fed officials want to wait and see how tariffs impact inflation,” said Tom Kenny, senior international economist at ANZ in Sydney, on a podcast.
He noted that some officials are concerned that tariffs could drive higher inflation expectations, leading to more persistent price pressures rather than just a one-off hit. “Our expectation is that the Fed should be in a position to cut rates at the September meeting,” Kenny added.
In the bond market, US Treasury bonds advanced ahead of the Fed’s meeting, pushing yields to their lowest level in almost four weeks.
This came after a strong auction of seven-year notes helped to quell concerns about diminishing demand for US government debt. The yield on the benchmark 10-year Treasury note was last at 4.328%, its lowest level since July 3.
The trade talk tightrope: no breakthroughs as deadlines near
The high-stakes trade talks between US and Chinese officials concluded on Tuesday with an agreement to seek an extension of their 90-day tariff truce, but no major breakthroughs were announced.
US officials have stated that it is now up to President Trump to decide whether to extend the trade truce, which expires on August 12, or to potentially let tariffs shoot back up to triple-digit figures.
Other nations are also in a race against the clock. India is reportedly bracing for higher US tariffs—likely to be between 20% and 25%—on some of its exports, as it holds off on making fresh trade concessions ahead of the August 1 deadline, according to two Indian government sources.
Meanwhile, three South Korean cabinet-level officials met with US Commerce Secretary Howard Lutnick in a last-ditch effort to secure a deal for their country.
In Japan, the focus will be on the Bank of Japan’s policy meeting on Thursday.
The central bank is expected to hold its policy steady, but investors will be scrutinizing its comments to gauge when the next rate increase might come, especially after the recent trade deal between Japan and the US cleared a major hurdle for the BOJ to resume its rate-hike path.
Corporate earnings and commodity watch
In the corporate world, US tech megacaps Microsoft and Meta are due to report their earnings on Wednesday. These results will be crucial in setting the tone for the rest of the week and the broader earnings season.
“It’s been a solid US reporting season so far, but these megacap names need to run it hot and blow the lights out, given the bar to please has been sufficiently raised,” commented Chris Weston, head of research at Pepperstone.
In commodity markets, oil prices rose as potential supply shortages came into focus after President Trump gave Moscow an abbreviated deadline to work towards ending the war in Ukraine. Brent crude futures rose 14 cents, or 0.19%, to $72.65 a barrel.
In currency news, the Singapore dollar strengthened by 0.2% after Singapore’s central bank kept its monetary policy settings unchanged on Wednesday.
This decision followed stronger-than-expected economic growth in the country for the second quarter. The euro also edged up from a one-month low, rising 0.2% to $1.1564, as markets continued to weigh the implications of the EU’s recent trade deal with the Trump administration.
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