Asian Stock Market: Portrays indecision amid pre-Fed jitters, off in Australia, India

• Asia-Pacific equities trade mixed as market players await FOMC.
• Complex signals over China and Japan’s Omicron woes add to trading filters.
• IMF downgrades global economic growth forecasts, Russia-Ukraine fears ease.
• Fed is up for a hawkish halt but expectations are too high and virus woes do test the bulls.

Asian investors fail to portray a clear trend while tracking the market’s cautious sentiment ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. Adding to the inaction are the national holidays in India, Australia and Indonesia.

That said, MSCI’s index of Asia-Pacific shares outside Japan drops 0.20% and so does Japan’s Nikkei 225. It should be noted that the Bank of Japan (BOJ) policymakers have conveyed fears of Omicron spread, via BOJ Summary of Opinions, as the nation escalation drive to curb the virus variant by taking 34 of the 47 prefectures under quasi-emergency.

The virus also pushed policymakers at the IMF to downgrade global growth forecasts as No.2 official Gita Gopinath said, “We project global growth this year at 4.4%, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China,” per Reuters.

It should, however, be noted that a former People’s Bank of China (PBOC) official Yu Yongding said, “China's economy can grow 5.5% in 2022, and policymakers could set a higher economic growth target as long as inflation and systemic financial risks are under control.” The same joins the PBOC’s heavy liquidity injection to help stocks in China and New Zealand. Though, fears of further US-China tussles seem to keep Hong Kong markets in mild losses.

Elsewhere, the US, the UK and European Union (EU) are determined to levy economic sanctions on Russia if it invades Ukraine, which in turn keeps geopolitical fears on the table. However, the latest updates suggest receding fears of an imminent war between Moscow and Kyiv.

On a broader front, the US 10-year Treasury yields remain sluggish around 1.78% after a five-day downtrend while the stock futures print mild gains.

Moving on, investors will pay major attention to Fed Chairman Jerome Powell’s speech with hopes of getting hints for the March rate hike. Also important to watch will be clues on when the Quantitative Easing (QE) will end, as well as balance sheet normalization. Should Fed policymakers shrug off virus woes to battle reflation fears, equities will have a further downside to track.

Read: Federal Reserve Interest Rate Decision Preview: Inflation, Omicron and equities