Asian Markets Gain Ahead of Fed Meeting

After a choppy trading day on Monday, Asian benchmarks were mostly higher on Tuesday as traders approached the two-day Federal Reserve policy meeting with subdued optimism. The central banks in Britain and Japan will also release their June policy decisions later this week. On Tuesday, the Reserve Bank of Australia was the first central bank to release minutes from its June meeting during which it cut cash interest rates to 1.25 percent and bank members noted that additional rate cuts were fairly likely in the coming months.

Japan’s Nikkei 225 was the only loser on Tuesday afternoon, easing 0.80 percent as of 1:58 p.m. HK/SIN. Australia’s ASX 200 was up 0.62 percent and Hong Kong’s Hang Seng Index was up 0.73 percent. Both of China’s benchmark indexes were also modestly higher, with the Shenzhen Composite gaining 0.24 percent and the Shanghai Composite trading up 0.08 percent. Asia’s gains followed a positive day on Wall Street on Monday when all three benchmark indexes closed higher.

African Swine Fever Threatens Emerging Markets

On the currency markets, traders were eyeing emerging markets, specifically Taiwan, Vietnam, Russia, Cambodia, Poland, and Romania, countries whose consumer price index is heavily reliant on pork. Pork inflation in emerging economies has risen by as much as 15 percent in recent months. African swine fever has been affecting pig herds in China and is responsible not only for driving up the costs of food there, but also impacting the demand for soybeans which are used to feed the pigs. Some traders are also concerned that a shift away from a pork-based diet could permanently affect global soybean consumption which would have widespread economic effects. The trade war between the United States and China can also have a deleterious effect on the soybean industry, as the tariffs implemented this year have already decreased U.S. soybeans to their lowest point in a decade.