China Socks end mixed as Fed meeting outcome awaited

The Mainland China share market finished mixed in cautious trading on Wednesday, 17 March 2021, as investors braced for a crucial meeting of the US Federal Reserve, and news of whether the central bank sees interest rates rising earlier than previously indicated. Rising tensions between Beijing and Washington also put a damper on the market.

At closing bell, the benchmark Shanghai Composite Index declined 0.963%, or 1.18 points, to 3,445.55. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 1%, or 21.75 points, to 2,218.26. The blue-chip CSI300 index grew 0.42%, or 21.50 points, to 5,100.86.

Investors awaited news from the US Fed meeting. Market participants are speculating Fed officials may signal to lift short-term growth, inflation, and labour market outlook as the rollout of the coronavirus vaccine and President Joe Biden's $1.9 trillion stimulus package assists the nation's burgeoning economic recovery.

Market participants expects the quarterly statement from the Federal Open Market Committee would be key to setting the tone for the weeks and months ahead for other central banks - and in turn, investors.

If the Fed signals a shift in rate hike, U.S. yields would rise and negatively affect stock markets. Recent climbs in U.S. and other bond yields have increased concerns about the cost of corporate funding, weakening the relative attractiveness of equities.

Rising tensions between Beijing and Washington also put a damper on the market. U.S. officials said that Washington will take an uncompromising stance in talks with China on Thursday in Alaska, the first face-to-face meetings between U.S. and Chinese senior officials since U.S. President Joe Biden took office. U.S. Secretary of State Antony Blinken has pledged to push back against Beijing's "coercion and aggression" including some of its territorial claims.

CURRENCY NEWS: China's yuan inched up against the dollar on Wednesday after firmer mid-point fixing by the central bank, but its strength was capped as investors awaited the outcome of a U.S. Federal Reserve policy meeting. Prior to market opening, the People's Bank of China set the midpoint rate of the yuan's daily trading band at 6.4978 per dollar prior, firmer than the previous fix of 6.5029. Spot yuan opened at 6.5060 per dollar and edged up to 6.5025 around midday, 35 pips firmer than Tuesday's late session close.

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