TOKYO (Reuters) - Investor caution ahead of the Federal Reserve’s interest rate meeting capped Asian stocks on Tuesday, while crude oil prices retreated as global growth worries overshadowed supply concerns stemming from recent Middle East tensions.
The Shanghai Composite Index lost 0.25%, Hong Kong’s Hang Seng rose 0.15% and Japan’s Nikkei dipped 0.3%.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2%.
Bucking the trend were Australian stocks, which rose 0.3% after minutes from the Reserve Bank of Australia’s (RBA) last policy meeting pointed to the possibility of another interest rate cut.
The Fed, facing fresh demands by U.S. President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year.
Fresh hopes for looser U.S. monetary policy have been a tonic for risk assets markets, which were buffeted last month by an escalation in the trade conflict between Washington and Beijing. The S&P 500 has gained 5% this month after sliding in May on trade war fears.
“In just a few months, the market has turned from being guided by the Fed to actively guiding the Fed,” wrote interest rate strategists at Bank of America Merrill Lynch.
Focus is now on how close the Fed could be to cutting interest rates amid the raging U.S.-China trade war, signs of the economy losing steam and pressure by President Trump to ease policy.
“The FOMC (Federal Open Market Committee) meeting is the week’s biggest event so there will
