Investing.com - Asia shares were mostly higher on Wednesday as investors await word from the Fed on rates and the outlook for winding down its massive balance sheet.
Japan's Nikkei 225 rose 0.38% and South Korea's benchmark Kospi index was up 0.37% as tech stocks recovered in both markets.
The S&P/ASX 200 inched up 0.01%. Hong Kong's Hang Seng index however dipped 0.27% and the Shanghai Composite fell 0.58% despite upbeat data from China. China reported industrial production for May rose a faster than expected 6.5% on year, and retail sales also gained a clip quicker at 10.7%, while fixed-asset investment came in a less than seen 8.6%.
Overnight, U.S. stocks closed higher on Tuesday, as technology stocks recovered from a two-day slump and financials gained momentum ahead of a widely expected interest rate hike from the Federal Reserve.
Investor focus shifted to monetary policy as the Federal Reserve’s two-day meeting got underway, with the majority of traders expecting the central bank to raise rates from 0.75-1% to 1.00-1.25%, when it concludes its meeting on Wednesday.
Elevated expectations of a June rate hike on Wednesday, spurred a move higher in financials, mostly banks, as Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) , and Citigroup (NYSE:C) ended the session in positive.
The focus on monetary policy overshadowed economic data showing that U.S. inflation held steady in May.
The Producer Price Index (PPI), a leading indicator of consumer price inflation was unchanged for the month May, a notch below forecasts of a 0.1% rise.
Inflation and jobs data are two of the main areas of the economy that the Fed considers in its decisions on future monetary policy, however, doubts have begun to emerge as to whether the Federal Reserve will raise rates for a total of three times this year as the pace of both jobs and inflation have slowed.
“Weakness in consumption is becoming more visible due to emerging headwinds from negative wage growth in real terms, combined with falling housing affordability and tighter credit standards. And while investment is finally picking up after being a drag on growth for many quarters, it has yet to offset the flagging consumer.” Said Anna Stupnytska, global economist at Fidelity International.
The Dow Jones Industrial Average closed in record territory at 21328.41. The S&P 500 gained 0.45% while the Nasdaq Composite closed at 6220.37, up 0.73%.