Asian markets off to a slow start in central bank packed week -September 17, 2023 at 08:30 pm EDT

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Fed rate decision on Weds, BOE on Thurs, BOJ on Fri

* Oil close to 10-month highs, dollar buoyant

SYDNEY, Sept 18 (Reuters) – Asian shares started
cautiously on Monday in a week packed with central bank meetings
that include the Federal Reserve and the Bank of Japan, which
will be closely scrutinised for the global interest rate
outlook.

Both S&P 500 futures and Nasdaq futures rose
0.2% in early Asia.

MSCI’s broadest index of Asia-Pacific shares outside Japan
slipped 0.1% after gaining 1.2% last week.
Japan’s Nikkei is closed for a holiday.

Sentiment in Asia improved recently after news of more
policy support from Beijing and better-than-expected Chinese
data add to signs the slowdown in world’s second largest economy
could have past it worst.

However, the stress in the property sector persisted, with
the fear that it is spreading to the financial system. Troubled
Chinese trust firm Zhongrong International Trust Co said it was
unable to make payments on some trust products on time.

This week, global central banks will take centre stage, with
five of those overseeing the 10 most heavily traded currencies –
including the U.S. Federal Reserve – holding rate-setting
meetings, plus a swathe of emerging market ones as well.

Markets are fully priced for a pause from the Fed on
Wednesday, so the focus will be on the updated economic and
rates projections, as well as what Chair Jerome Powell says
about the future. They see about 80 basis points of cuts next
year.

“In theory, the FOMC meeting should be a low-volatility
affair, but it is a risk that needs to be managed,” said Chris
Weston, head of research at Pepperstone.

“We should see the median projection for the 2023 fed funds
rate remaining at 5.6%, offering the bank the flexibility to
hike again in November, should the data warrant it.”

Weston added that if the Fed revises up the rate projections
for 2024, that would see rate cuts being priced out, resulting
in renewed interests in the U.S. dollar and downward pressure on
shares.

On Thursday, Bank of England is tipped to hike for the 15th
time and take benchmark borrowing costs to 5.5%, while Sweden’s
Riksbank is seen hiking by 25 basis points to 4%.

Bank of Japan is the key risk event on Friday. Markets are
looking for any signs that the BOJ could be moving away from its
ultra-loose policy faster than previously thought, after recent
comments by Governor Kazuo Ueda sent yields much higher.

Last Friday, Wall Street ended sharply lower as U.S.
industrial labour action weighed on auto shares and chipmakers
dropped on concerns about weak consumer demand. Rising Treasury
yields also pressured Amazon and other megacap growth
companies.

Cash Treasuries were not traded in Asia with Tokyo shut.
Treasury yields edged higher on Friday, with the two-year
above the 5% threshold, as futures price in higher
rates for longer ahead of a the Fed’s policy meeting this week.

In the currency markets, the U.S. dollar was still
standing strong near its six month top at 105.23 against a
basket of major currencies.

The euro recovered 0.1% to $1.0068 in early Asia
trade, after slumping to a 3-1/2 month low of $1.0629 last week
as the European Central Bank signalled its rate hikes could be
over.

Oil prices were higher on Monday, after hitting 10 month
tops last Friday, stoking inflationary pressures. Brent crude
futures rose 0.1% at $94.01 per barrel and U.S. West
Texas Intermediate crude futures were up 0.2% at $90.97.

The gold price was flat at $1,923.33 per ounce.

(Reporting by Stella Qiu; Editing by Lincoln Feast)