Asian Stocks Edge Higher as Investors Await Fed Decision, U.S.-China Trade Developments

Asian markets rose modestly on Wednesday as investors remained cautious following U.S.-China trade talks that ended without a major breakthrough and ahead of the Federal Reserve’s policy announcement. MSCI’s Asia-Pacific index outside Japan gained 0.3%, led by Taiwanese shares, while Australian stocks advanced 0.7%. Japan’s Nikkei slipped 0.03% and Hong Kong’s Hang Seng fell 0.4%.

The euro rebounded 0.2% to $1.1564 after hitting a one-month low, supported by optimism surrounding the EU’s trade deal with Washington. Traders are closely watching several upcoming central bank decisions, economic data, and corporate earnings reports, including results from Microsoft and Meta later today.

The Fed is widely expected to keep interest rates steady, though some policymakers may advocate for cuts amid trade tensions and inflation uncertainties. Analysts suggest rate reductions could come as early as September. U.S. Treasury yields dipped, with the 10-year note at 4.328%, the lowest since early July.

In the Asia-Pacific region, the Bank of Japan is also expected to maintain its policy stance on Thursday, with markets awaiting clues on future hikes following progress in Japan-U.S. trade talks. Meanwhile, attention is focused on looming U.S. tariff deadlines. The 90-day U.S.-China tariff truce expires August 12, while India faces potential 20%-25% tariffs on certain exports by August 1.

Oil prices inched higher, with Brent crude at $72.65 a barrel, amid supply concerns linked to geopolitical tensions over Ukraine. The Singapore dollar strengthened 0.2% after its central bank left monetary policy unchanged following stronger-than-expected Q2 growth.

Market sentiment remains cautious as investors brace for policy updates and earnings that could set the tone for global markets in the coming weeks.