Asia Pacific shares opened higher on Wednesday, tracking US gains, as investors awaited the US Federal Reserve’s next monetary policy decision later in the day.
Elsewhere in the region, both South Korea’s Kospi and Australia’s S&P ASX were about 1% higher. In mainland China, the Shanghai Composite edged up about 0.5%.
The MSCI Asia Pacific index, which excludes Japanese companies, was broadly higher, rising 0.8%. US futures, including both S&P 500 and Nasdaq, were flat in Asian trade.
“Asia is trading higher today as risk appetite appears to be returning amidst receding volatility around bank stocks, at least for the time being ahead of Wednesday’s schedule statement from the FOMC,” said Stephen Innes, managing partner of SPI Asset Management, referring to the the Federal Open Market Committee — which is due announce its decision on interest rates on Wednesday afternoon.
Investors are largely pricing in a 25 basis point rate hike and will listen closely to see if Federal Reserve Chair Jerome Powell is able to justify hiking rates while reassuring panicked markets that the Fed can maintain the safety and security of the banking system.
On Tuesday, US stocks closed higher as shares of regional banks rebounded from record-breaking losses earlier in the month.
Shares of troubled lender First Republic
(FRC) led the way, soaring 30%, making back a large portion of the losses from its 47% plunge in the prior session. The SPDR Regional Banking ETF (KRE), which tracks a number of small and mid-sized bank stocks, gained 5.8% for the day.
The boost came after US Treasury Secretary Janet Yellen said at an event hosted by the American Bankers Association that the federal government was willing to guarantee more deposits should the current banking meltdown continue.
– CNN’s Nicole Goodkind contributed reporting