ASIA-PAC MID-SESSION UPDATE: China outperforms as demand for stocks are ignited by MSCI

Asian equities are mostly higher despite a mixed lead from Wall St. where the Dow and S&P closed with losses amid cautiousness ahead of the FOMC. ASX 200 (+0.1%) trades marginally higher with gains led by the strength in commodity names amid the bounce in base metals, while Nikkei 225 (-0.1%) underperforms as the index failed to benefit from early currency weakness but remains in close proximity to test the 24,000 level. Elsewhere, Hang Seng (+1.1%) and Shanghai Comp (+.1.1%) outperforms as trade tensions take a backseat amid reports that MSCI will consider increasing the weight of China A-shares in its indices to 20% from 5%, in turn spurring demand for Chinese stocks.

In FX markets, antipodeans stole the limelight as an improvement in New Zealand’s business outlook and activity lifted NZD/USD to near weekly highs and gave AUD/USD a boost in sympathy, while CAD nurses some of its intra-day losses to trade around 1.2950 against the greenback. Elsewhere, JPY is choppy in which it initially weakened before USD/JPY stalled around the 113.00 level and DXY remains flat just above the 94.00 level, while EUR/USD and GBP/USD trade little changed amid a lack of fresh catalysts and ahead of the upcoming FOMC meeting.

Finally, 10yr JGBs saw a slight rebound and printed fresh weekly highs as yields marginally declined across the curve, with focus shifting to today’s 40-year auction.