Asian equities finished mostly lower Wednesday, where early gains softened amid muted trading volumes, partly because of a Japanese public holiday.
The declines were also notched ahead of an expected Federal Reserve interest-rate increase and updated economic projections from the central bank.
Hong Kong’s Hang Seng Index HSI, -0.43% reversed its morning climb and closed down by 0.4%. China’s Shanghai Composite Index SHCOMP, -0.29% lost 0.3% and Shenzhen’s tech-heavy composite index 399100, -0.71% fell 0.7%.
Shares of Chinese developers shed some of their earlier gains after upbeat sales data while internet heavyweight Tencent 0700, -0.86% fell 0.9%, giving up its early 2% advance ahead of its 2017 report later Wednesday.
Key in the Fed releases Wednesday will be the number of interest-rate increases policy makers predict for 2018. In December, expectations were for three increases, which would match the number in 2017. But some analysts have raised the prospect of four rate rises this year as U.S. economic growth has picked up and inflation could do the same.
While stocks are off early February lows, “I think we are still going through a corrective phase where the market is pricing for a higher-rate environment,” said Paul Kitney, chief equity strategist for Asia Pacific at Daiwa Capital Markets.
New Fed Chairman Jerome Powell will hold a press conference after the policy decision is released.
Unless there is a strong hawkish bias from the Fed, stock markets are likely to stay focused on corporate results, said Ben Bei, head of equity research at CIMB in Hong Kong.
“Earnings so far are pretty much in line with positive expectations of the market,” which has helped stocks despite the prospect of continued U.S. rate increases, said Bei.
Earnings growth at large Chinese firms has been better than expected, said Bocom International’s Hao Hong.
In New Zealand, the NZX 50 index NZ50GR, +1.43% closed up 1.4%, notching its fifth record finish of the past week and a half. Synlait Milk SML, +14.09% soared 14% to a fresh all-time high after posting record fiscal first-half earnings and giving upbeat guidance. Partner a2 Milk ATM, +3.55% rose 3.6%.
Oil stocks also outperformed after crude’s 2% price jump Tuesday on concerns about tensions between Saudi Arabia and Iran. Though the energy sector rose 1.2% in Australia, the country’s stock benchmark XJO, +0.23% closed just 0.2% higher due to weakness in health-care and real-estate stocks.
Indexes in Indonesia and India 1, +0.42% rose by 1.1% and 0.4%, respectively.