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Nikkei Markets

Asian equities advance as investors await Fed interest rate decision

Technology stocks pace gains on A300 Index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan advanced Tuesday ahead of the beginning of the U.S. Federal Reserve's monetary policy review meeting. The Nikkei Asia300 Index gained 0.8% to close at 1,271.35.

Asian equities advanced, the dollar struggled, and Treasury yields edged lower on Tuesday ahead of the two-day Fed meet. The U.S. central bank is projected to take a more accommodative stance amid muted inflation and an uncertain economic outlook. Investors bet the Fed will leave interest rates unchanged after this policy review but expect it to change the language in the accompanying statement to reflect its readiness to cut rates.

"The FOMC (Federal Open Market Committee) is likely to remove from the statement the line about being patient with regard to future policy adjustments," ANZ Research said in a note. "In its place, we expect the FOMC to say something along the lines that it is closely monitoring inflation indicators and global economic and financial developments. With respect to policy guidance, the FOMC may add that it is prepared to adjust policy to support the (economic) expansion."

Fed Chair Jerome Powell earlier this month had signaled that policymakers were open to slashing borrowing costs amid mounting trade worries. The Fed Chair had said that officials were closely monitoring the implications of the trade developments and were prepared to act if the U.S. economic outlook was threatened.

Amid Powell's remarks and tepid U.S. economic data, the probability of a rate cut at the July meeting has climbed to more than 85%. For the June meeting, it is at 20%.

In movers on the A300 Index, heavyweight technology names did well after the sector helped U.S. equities to nudge higher on Monday. Tencent Holdings added 1.5% and Taiwan Semiconductor Manufacturing and Samsung Electronics advanced at least 1% each.

Hong Kong's Hang Seng Index was among the region's top performers for a second day after the city on Saturday suspended a bill, which if enacted could allow the extradition of criminal suspects from the city to other places, including China. The index closed 0.8% higher.

Property developers were among the biggest winners. Sun Hung Kai Properties rose 2.5% and New World Development advanced 1.9%.

Singapore Airlines edged 0.1% higher after passengers carried in May increased 6.4% on-year at 3.05 million. Passenger load factor rose 0.9% to 80.5%.

Top Glove fell 2.6%. The Malaysian glove manufacturer on Tuesday reported a 36.5% year-on-year fall in net profit for its third-quarter.

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