Southeast Asian markets were range-bound on Monday ahead of a US Federal Reserve policy meeting that could provide cues on the pace of further rate tightening in the months to come. With the Fed widely expected to raise interest rates at its two-day meeting that ends on Wednesday, investors will be focussing on whether the central bank thinks the US economy is robust enough to withstand further rate hikes through 2017, and how it plans to whittle down its massive balance sheet.
"A 25 basis point rate hike is assumed to be a done deal for the June FOMC (Federal Open Market Committee); with interest rate markets ascribing over 90 percent probability," Mizuho Bank said in a note. "This means a 25 basis point hike is baked into market (prices), and so failure to yank the trigger will result in a dovish knee-jerk reaction, but this is the outside risk."
MSCI's broadest index of Asia-Pacific shares outside Japan , however, was down 0.8 percent as the region's technology heavyweights were knocked lower by a slide in US tech shares. Vietnam's benchmark index snapped two sessions of declines to end higher, underpinned by FLC Faros Construction, which closed 6.9 percent higher, notching its highest percentage gain in more than three months.
FLC Group, whose chairman holds a majority stake in FLC Faro Construction, said it is working with Airbus to lease about seven aircraft by 2018. FLC Group aims to start a new airline that could take to the skies for the first time early next year. Indonesia led the regional markets higher, bolstered by financial stocks, as investors await Bank Indonesia's policy rate decision later this week. Bucking the trend, Singapore shares slipped with financials accounting for three-fourth of the losses. The Malaysian and Philippine markets were closed for local holidays.
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