By PAMELA SAMPSON, Associated Press
BANGKOK (AP) — Asian stock markets drifted Wednesday as investors waited for the Federal Reserve's latest assessment of the U.S. economy.
The Fed is not expected to announce any big changes when it releases an updated policy statement Wednesday at the end of a two-day meeting. However, investors are anxious for clues about when the Fed might start scaling back its monetary stimulus.
"We're unlikely to get anything new, but obviously everyone is cautious just in case we get anything new," said Andrew Sullivan of Kim Eng Securities in Hong Kong.
The Fed is buying $85 billion in Treasury and mortgage bonds every month to spur growth and lending. While long-term interest rates have been held near record lows, the program has also drawn investors away from bonds and into higher yielding investments like stocks and commodities. Recent hints that the Fed might start scaling back its stimulus program have sent stocks reeling.
Investors are also waiting for the U.S. government to Wednesday report its first estimate of economic growth for the second quarter. DBS Bank Ltd. in Singapore said analysts are expecting a drop in GDP growth to 1 percent from 1.8 percent. Most economists blame tax increases and government spending cuts for the sluggish second quarter.
Investors are also focusing on U.S. employment figures for July, due out Friday. Fed Chairman Ben Bernanke has said that the central bank could begin to scale back its bond purchases later this year if the economy strengthens, but Fed officials typically put greater weight on employment and inflation data than the GDP figures.
Japan's Nikkei 225 index, which endured sharp swings earlier in the week, was down 0.6 percent to 13,782.92 ahead of the release of earnings from corporate giants including Panasonic and Honda. The Tokyo benchmark closed down 3.3 percent on Monday and then recovered about halfway Tuesday.
Hong Kong's Hang Seng gained 0.2 percent to 22,002.24. South Korea's Kospi rose marginally to 1,918.18. Australia's S&P/ASX 200 advanced 0.6 percent to 5,076.10. Shares jumped in the aftermath of comments by Reserve Bank of Australia governor Glenn Stevens, who on Tuesday suggested there was more room for interest rate cuts if needed.
Benchmarks in mainland China rose while Singapore, the Philippines, Thailand and Taiwan fell.
Chinese property stocks were among the big gainers. Shanghai-listed Poly Real Estate Group advanced 4.5 percent while China Resources Land rose 4.9 percent in Hong Kong.
On Wall Street on Tuesday, the Dow Jones industrial average fell 36.86 points, or 0.2 percent, to close at 15,521.97. The Standard & Poor's 500 index dropped 6.32 points, or 0.4 percent, to 1,685.33. The Nasdaq composite index declined 14.02 points, or 0.4 percent, to 3,599.14.
Benchmark crude for August delivery was up 3 cents to $103.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.47 to close at $103.08 on the Nymex on Tuesday.
In currencies, the euro slipped to $1.3258 from $1.3259 late Tuesday. The dollar fell to 98.04 yen from 98.06 yen.
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