Asian markets fall ahead of Xi speech, Fed meeting

Asian stocks fell on Tuesday, tracking losses on Wall Street as traders braced for an interest rate hike by Federal Reserve.

Japan’s Nikkei 225 index

NIK, -1.64%

  was 1.2% lower and the Kospi

SEU, -0.51%

  in South Korea dropped 0.4%. Hong Kong’s Hang Seng

HSI, -0.92%

 slipped 0.9%. The Shanghai Composite index

SHCOMP, -1.09%

  dropped 1%, as was Australia’s S&P ASX 200

XJO, -1.07%

. Shares were lower in Taiwan

Y9999, -0.85%

  and Southeast Asia.

Among individual stocks, Japan’s Fast Retailing Co.

9983, -2.08%

  slid 1.7% and Korean chipmaker SK Hynix

000660, -1.61%

  fell 2%, while Hong Kong-listed Tencent Holdings

0700, -2.40%

  fell more than 2%. A number of Japanese industrial companies, such as Nippon Steel & Sumitomo Metal Corp.

5401, +0.63%

  and Mitsubishi Materials

5711, +0.00%

 , rose more than 1%, while CSPC Pharmeceutical

1093, +2.94%

  was one of the few gainers in Hong Kong.

Investors were awaiting a speech by Chinese President Xi Jinping to commemorate the 40th anniversary of China‘s economic reforms. Some analysts were hoping Xi would announce new commitments to a free-market economy.

“China equities are parked in neutral as investors remain hopeful for a more proactive fiscal policy tone from mainland regulators at Chinas economic work conference,” said Stephen Innes, head of Asia-Pacific trading at Oanda, in a note to clients.

On Monday, broad selling knocked U.S. indexes to their lowest levels in over a year. Investors sold almost everything, from technology and retail stocks to steadier high-dividend companies. Less than 40 of the 500 stocks comprising the S&P 500

SPX, -2.08%

  finished the day higher. The benchmark index gave up 2.1 percent to 2,545.94, its lowest level since Oct. 9, 2017. The Dow Jones Industrial Average

DJIA, -2.11%

  skidded 2.1 percent to 23,592.98 and the Nasdaq composite

COMP, -2.27%

  was down 2.3 percent at 6,753.73.

The Federal Open Market Committee begins a two-day meeting on Tuesday. It is expected to raise its short-term interest rate by a modest quarter-point, to a range of 2.25% to 2.5% a day later. Investors fear more monetary tightening would weigh on U.S. growth, and eventually, the global economy, that is already expected to slow in 2019 because of trade tensions. President Donald Trump tweeted that it was “incredible” the Fed was considering another rate hike, with “a very strong dollar and virtually no inflation.” The central bank forecasts three more rate hikes in 2019.

“Despite Donald Trump’s recent overture, the Fed looks set to hike rates again on Wednesday with market players anxious to see if the economy can handle more policy tightening given expectations for slowing growth,” ING economists Nicholas Mapa and Prakash Sakpal said in a commentary.

Oil prices fell on worries about oversupply and softening growth in China, which could hit demand. Benchmark U.S. crude

CLF9, -1.30%

  shed 49 cents to $49.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.32 to $49.88 in New York on Monday. Brent crude

LCOG9, -1.22%

 , used to price international oils, gave up 59 cents to $59.02 a barrel. It lost 67 cents to settle at $59.61 a barrel in London.

The dollar

USDJPY, -0.25%

  weakened to 112.61 yen from 112.83 yen in late trading Monday.

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