Asian shares consolidate gains after rally; Fed, BOJ awaited

The Shanghai Composite Index closed up 0.1% after falling as much as 2.8% and trading up as much as 0.4% earlier Tuesday. Last week, stock markets rebounded on bets that Japan’s huge stimulus would continue to raise following China’s interest-rate cut as well as the indication of the European Central Bank that it might add to its asset purchase program at the end of the year.

Frequently used as a China play because of Australia’s significant trade with that country, the Aussie slipped about 0.1 percent to $0.7235, and also shed about 0.6 percent on the 87.23 yen.

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Asian stocks on Monday were close to wiping out all their losses since China’s shock currency devaluation in August, as global equities rallied after the Chinese central bank cut rates to shore up faltering growth in the world’s second-largest economy. The U.S. Federal Reserve, which also meets this week, is also increasingly seen delaying its first rate increase for almost a decade until next year. Valeant Pharmaceuticals sank almost 14% in pre-market trading after the company said it would set up a panel to probe allegations about its associations with specialty pharmacy distributor Philador. MSCI’s index of Asia-Pacific shares outside Japan edged up 0.2 percent. Still, anticipation of easing, which would weaken the yen, at this week’s Bank of Japan policy meeting capped the currency’s gains. On Wall Street, S&P 500 Index rose 1.1% to turn positive on the year, while the tech-heavy Nasdaq jumped 2.3%.Technology shares led the way, thanks to gains in Alphabet, Amazon and Microsoft, after the three companies reported earnings results.

The former two hit record highs, while Microsoft rose to a 15-year high.

However, South Korea’s won gained 0.27 percent and the Taiwan dollar added 0.44 percent. “Mainland investors are cautious”.

“The recent rally off the back of speculation that central banks were about to lend their support to markets wasn’t unfounded, ” said Jonathan Sudaria, night dealer at London Capital Group, in a note.

Markets are looking to Chinese Communist party’s central committee meeting from Monday to Thursday to set out a five-year plan.

As negative yields undermine the attraction of holding the euro, traders pushed it to a 2 1/2-month low of $1.0989 in early Asian trade.

On Monday, Japan Post Holdings Co. priced its initial public offering at the top of its proposed range, with the government raising about 693 billion yen ($5.71 billion) from selling 11% of its shares outstanding. “Markets are now expecting easing from the BOJ”, said Takeru Ogihara, chief strategist at Mizuho Trust Bank.

Shares in European markets were mostly lower, but Germany’s DAX .GDAXI managed a modest 0.06 percent gain after a business sentiment survey showed that morale had fallen by less than expected in October.

Crude oil prices fell, as US crude settled down 1.4 percent to $43.98 and Brent settled 0.9 percent lower to $47.54 a barrel on worries that the oversupply in oil products would swell from unseasonably warm weather and the waning maintenance cycle for USA refineries.