Equities Off Earlier Lows Although Cautious Ahead Of CB Meetings

Asian stocks fell amid speculation that investors are reducing their holdings ahead of major upcoming events, including central bank decisions, key economic data, and earnings from US megacap companies. The MSCI Asia Pacific Index extended July's decline to 0.5%, with shares in Hong Kong leading losses as optimism over Chinese government stimulus waned. The yen held strong before a BoJ policy decision, while the USD edged higher ahead of a Federal on Thursday. Commodities have erased gains for the year, affected by a challenging outlook in China and losses in US natural gas and foodstuffs.

• Japanese stocks fell as investors braced for key central bank decisions from the BOJ and the Fed, while also digesting mixed corporate earnings. The Topix Index is 0.63% lower led by declines in banks and mining stocks, with Mitsubishi UFJ contributing significantly by falling 1.4%, while the Nikkei is 0.50% lower. Investor caution ahead of the BOJ meeting, where potential changes to quantitative easing and interest rates are anticipated, is keeping many on the sidelines. Additionally, machinery maker Komatsu's earnings are under scrutiny, adding to the cautious sentiment in the market.
• South Korean equities opened lower, influenced by mixed performances on Wall Street and investor anticipation of the Federal Reserve's upcoming rate decision. The benchmark KOSPI is down 1.10% with major large-cap stocks seeing declines. Notably, Samsung dropped 0.9%, and SK hynix fell 2.7%, reflecting broader market caution, while the small-cap focused Kosdaq is down 0.70%. The market is also awaiting earnings results from major tech firms like Samsung, adding to the cautious trading environment.
• Taiwan equity opened weaker, however as steady to trade little changed for the session after global tech stocks has seen a bit of a bounce as we head into Microsoft's earnings which are due out post the US session later today.
• In Australia, the ASX 200 index fell as much as 1% early driven by losses in mining and tech shares, we have since pared half those losses to trade down 0.50% as we head into the final hour of trading. Investors are cautious ahead of the country's quarterly inflation report due on Wednesday, which will influence the debate over the need for further interest rate hikes by the RBA. In New Zealand, the NZX 50 index bucked the regional trend, rising 0.85%, as investors remained optimistic about the local economy and corporate earnings, while A2 Milk was the largest contributor to gains after Bell Potter raised their price target on the stock 24%.
• In EM Asia markets are mixed today with Thailand's SET returning for their break to trade 0.40% higher, Singapore's Strait Times is 0.15% higher while elsewhere most other markets are lower with Malaysia's KLCI down 0.10%, Indonesia's JCI is 0.70% lower, Philippine's PSEi is 1% lower while India's Nifty 50 is little changed.