Asian Markets Mixed as Fed Meeting Looms; U.S. Stocks Hit New Highs

Asian stock markets displayed varied performance on Tuesday, September 17, 2024, as investors braced for the Federal Reserve's highly anticipated meeting. The Federal Reserve, established in 1913 as the central bank of the United States, is expected to make a significant decision on interest rates tomorrow.

In Tokyo, the Nikkei index, which has been tracking Japanese stocks since 1950, declined 1% to 36,203.22. Conversely, Hong Kong's Hang Seng Index, a key indicator of the city's stock market performance since 1969, advanced 1.3% to 17,654.79. Markets in mainland China and South Korea remained closed. Australia's S&P/ASX 200, introduced in 2000 as the benchmark for Australian equity performance, gained 0.2% to 8,140.90.

Traders are keenly awaiting the Fed's decision, expected to be the first rate cut in over four years. The central bank has maintained high rates to control inflation, which peaked approximately two summers ago. The primary question now is the extent of economic relief the Fed will provide.

In the United States, stock markets reached new heights on Monday. The Dow Jones Industrial Average, one of the oldest stock market indices dating back to 1896, rose 228 points (0.6%) to 41,622.08, surpassing its previous record. The S&P 500, introduced in 1957 and widely regarded as a key indicator of U.S. stock market performance, inched up 0.1% to 5,633.09, nearing its July record. The NASDAQ Composite, known for its concentration of technology stocks since its establishment in 1971, slipped 0.5% to 17,592.13.

Oracle Corporation, a leading software company founded in 1977, saw a 5.1% gain following a strong earnings report last week. Alcoa, a global leader in aluminum products since 1888, jumped 6.1% after announcing the sale of its stake in a Saudi Arabian joint venture. However, influential tech giants like Apple and Nvidia experienced slight declines.

Carl Icahn's Icahn Enterprises rose 14.5% following the dismissal of a proposed class-action lawsuit. The Mosaic Company, a major fertilizer producer formed in 2004, fell 3.6% due to production issues caused by equipment failures and Hurricane Francine.

Investors are increasingly betting on a larger-than-usual rate cut by the Fed, potentially half a percentage point, according to data from the CME Group, the world's largest financial derivatives exchange founded in 1898.

In currency markets, the Japanese yen strengthened against the dollar, reflecting expectations that the Bank of Japan, established in 1882, will continue its gradual rate hikes. The euro, introduced in 1999 as the official currency for many European Union members, slightly weakened against the dollar.

Oil prices saw modest increases, with U.S. benchmark crude and Brent crude, a major trading classification since 1976, both rising.

"The warning is that markets steeped in rich policy expectations are ripe for volatility. Accordingly, it may be best to be braced for (policy) curveballs that could potentially force market re-pricing."

As global markets await the Fed's decision, investors remain cautious, balancing optimism with the potential for unexpected policy shifts that could impact market dynamics.