Asian Stock Market: Grinds higher amid sluggish yields ahead of Fed, China leads bulls

• Asia-Pacific shares waver as risk-positive headlines from China jostle with pre-Fed anxiety.
• NZX 50 bucks the trend amid increasing hawkish bets on RBNZ.
• Yields struggle as strong US data favor Fed hawkish but 75 bps rate hike is priced-in.
• Clues for Fed’s December rate hike will be crucial to watch during today’s FOMC.

Asian equity traders remain cautiously optimistic even as the pre-Fed anxiety challenges the bulls during early Wednesday. The underlying reasons could be linked to the latest headlines from China and the chatters that the US Federal Reserve (Fed) will ease on rate hikes from December.

The Governor of the People’s Bank of China (PBOC), Yi Gang, recently crossed wires and stated that China's economy remains broadly on track. “We hope the housing market can achieve a soft landing,” added the policymaker. Additionally, an official from the China Banking and Insurance Regulatory Commission (CBIRC) also helped improve the mood while saying that the property sector is now "stable".

On the same line could be the Bank of Japan (BOJ) Governor Haruhiko Kuroda’s defense of the easy money policies.

Amid these plays, MSCI’s index of Asia-Pacific shares ex-Japan rises 2.0% whereas Nikkei 225 remains indecisive at around 27,660. Moving on, Chinese equity benchmarks also print gains of around 1.0% and more, which in turn helps Australia’s ASX 200 print mild gains despite downside Aussie data. Elsewhere, New Zealand’s NZX 50 dropped 0.80% intraday after the nation’s third quarter (Q3) employment numbers came in stronger enough to keep the Reserve Bank of New Zealand (RBNZ) hawks on the table.

On a broader front, The US 10-year Treasury yields remain sidelined near 4.05% at the latest as traders remain divided over the US central bank’s next move given the 75 bps rate hike and hopes favoring easy rate lifts from December. While portraying the mood, S&P 500 Futures snap a two-day downtrend to print a 0.20% intraday upside by the press time.

It should be noted that the firmer US data and recent fears over Taiwan join the Fed policymakers’ readiness for a 75 bps rate lift to challenge the market sentiment, even if the US Dollar Index (DXY) remains pressured. Amid these plays, the prices of gold and crude oil remain firmer.

Moving on, traders will pay attention to how well the Fed can defend the hawks even as the 75 bps rate hike is already priced in. Also, the clues for December’s rate lift will be closely observed for clear directions.

Also read: Fed November Preview: Is it time for a dovish signal?