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Nikkei Markets

Financial, technology shares lift Asia ahead of Fed decision

Sinopec, Sapura slide after oil price slumps while Samsung recovers from Tuesday's loss

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan rose Wednesday, helped by a rebound for some technology and financial heavyweights, as investors await the U.S. Federal Reserve's last policy review for 2018.

The Nikkei Asia300 Index added 0.7% to 1,211.32. Samsung Electronics and Taiwan Semiconductor Manufacturing Co. (TSMC) rose 0.5% and 1.3%, respectively, recouping some losses from the previous day. AIA Group, an insurer, added 1.7%, while Bank of China climbed 0.6%. Regional energy producers declined after Brent crude prices slumped 5.6% on Tuesday, with Sapura Energy shedding 1.7% in Kuala Lumpur and China Petroleum & Chemical (Sinopec) losing 4.7% in Hong Kong.

The Dow Jones Industrial Average and the Nasdaq Composite rose overnight, after two days of losses. The Fed is widely expected to deliver a fourth rate increase for the year at its two-day meeting ending later Wednesday. Chairman Jerome Powell, who will address the media after the decision, is speculated to offer some clues on the path ahead for rates. Rising borrowing costs in the U.S. have been a drag on Asian stocks this year, and some participants worry that dovish indications by the Fed will not help either.

"Given the cautious market sentiment, a slower pace of rate rises could be interpreted as a sign of weakness and put more pressure on risk assets," Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Management, wrote in a note. "Any change in policy rate expectation could be seen as the Fed paying more attention to potential warning signals, including a flatter yield curve and wider corporate credit spreads."

Meanwhile, participants continue to keep an eye on trade tensions between the U.S. and China. The two nations held vice-ministerial level talks on Wednesday to discuss their trade dispute as they move closer to a meeting in January, U.S. Treasury Secretary Steven Mnuchin told Bloomberg on Tuesday. The two sides, which have held several rounds of talks in recent weeks, plan to hold a formal face-to-face meeting in next month, the report said.

"The market is in need of some good news, and while trade remains a work in progress, investors are at least taking some comfort that a resolution roadmap could be in place as soon as March 2019," Stephen Innes, head of trading for Asia Pacific at Oanda in Singapore, wrote in a note.

Rig-builder Keppel Corp. edged 1.8% lower in Singapore. The company said its property arm Keppel Land's unit agreed to develop a housing project in Indonesia with PT Metropolitan Land (Metland).

CIMB Group Holdings rose 1.2% after saying it is proposing a transfer of its stockbroking business to a joint venture with China Galaxy Securities and will book a gain of about 200 million ringgit ($47.8 million).

China Railway Construction fell 0.6%, trimming gains for the month so far to 8%. The company on Tuesday said its unit won a bid for two construction projects with a total value of 10.09 billion yuan ($1.46 billion).

The Nikkei Asia300 ASEAN Index for Southeast Asian companies added 1.2%. Telecommunications service provider PLDT rose 2.1% and property developer SM Prime Holdings ended 2.9% higher in Manila. Thailand's central bank on Wednesday raised its key interest rate to 1.75% from 1.5%.

--Amy Lam

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