Asian stocks set for mixed session as investors await Fed

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SHANGHAI/NEW YORK (Reuters) – Most Asian shares rose on Wednesday, extending a rally driven by upbeat Chinese and U.S. economic data, but the dollar, U.S. yields and gold held steady as investors awaited the Federal Reserve’s view on the economy at its policy meeting.

FILE PHOTO: A man wearing a protective face mask, following the coronavirus disease (COVID-19) outbreak, walks in front of a stock quotation board outside a brokerage in Tokyo, Japan, May 18, 2020. REUTERS/Kim Kyung-Hoon

Following robust industrial output and retail sales data from China and higher U.S. factory production investors are focusing on the Fed’s policy statement due Wednesday, the first since Chair Jerome Powell announced an increased tolerance for higher inflation.

“The risk is if we see no new developments since his Jackson Hole shoutout, this could have near-term pressure on yields ticking up, gold and precious metals complex lower, dollar higher and general risk-off in U.S. equities,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets.

“If we do get a surprise on the accommodative side – we’ve gotten this a few times from smooth Jay (Powell) – then we could get the inverse of all that, including the next big structural break higher in gold.”

The Fed is due to announce its decision at 1800 GMT Wednesday, followed by a news conference from Powell.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 0.5% higher. Australian shares .AXJO gained 0.74% and Taiwan’s tech-heavy board .TWII added 1.16%.

However, Chinese blue-chips .CSI300 pulled back 0.1% as investors booked profits after three days of gains.

Investors also await Japan’s parliamentary approval of Yoshihide Suga as the country’s next prime minister on Wednesday. Suga will then form a new cabinet.

Japan’s Nikkei .N225 erased early losses and was last up 0.14%.

The Fed meeting comes as U.S. lawmakers

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