Asia shares hope for best as Fed decides on rates

SYDNEY : Asian shares staged a cautious bounce on Wednesday with hopes a global banking crisis would be averted vying with uncertainty over the outlook for U.S. interest rates as the Federal Reserve holds a high-stakes meeting on policy.

The unease left both S&P 500 futures and Nasdaq futures barely changed. EUROSTOXX 50 futures edged up 0.2 per cent, while FTSE futures rose 0.1 per cent. All of which puts the Fed in a tough position as it decides whether to raise interest rates later today. They note the Fed could still soften its forward guidance by dropping its reference to"ongoing increases", much as the European Central Bank did last week.An added complication is whether the Fed temporarily stops selling its holdings of Treasury debt, known as Quantitative Tightening, and what Fed members do with their dot plot forecasts for future rate hikes.Having even priced in the risk of a rate cut last week, futures now imply an 86 per cent chance of a quarter-point rise to 4.

Bond investors will be hoping he can instil some calm given the wild volatility of recent days. Two-year Treasury yields were hesitating at 4.14 per cent, having made a remarkable round-trip from 5.085 per cent to 3.635 per cent in just nine sessions.

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