HONG KONG – Asian stocks stabilized Tuesday as selling pressure eased after several days of steep losses and investors shifted to a holding pattern ahead of a Fed decision on scaling back stimulus.
Investors worried about slowing growth in China, the world’s second biggest economy, found some solace in reports that a high-profile trust company in China cut a last minute deal to avoid a default.
Some 700 clients who bought into a 3 billion yuan ($500 million) product from China Credit Trust agreed on Monday to a restructuring so that they could get their investment back, Xinhua reported, avoiding the first of what was feared would be a cascade of defaults in the country’s shadow banking sector.
Investor sentiment has improved though it remains cautious, Cynthia Jane Kalasopatan of Mizuho Bank in Singapore wrote in a market commentary. “The bailout of China’s trust helped calm markets. But risk appetite remains relatively low.”
Investors are awaiting the outcome of a two-day Federal Reserve meeting kicking off Tuesday where officials are expected to announce a reduction in its bond buying program by another $10 billion to $65 billion as the U.S. economy continues to improve.
Australian stocks declined sharply after a public holiday, catching up with global declines the day before. The S&P/ASX 200 fell 0.7 per cent to 5,205.40.
Trading elsewhere in Asia was more restrained. Japan’s Nikkei 225 climbed 0.2 per cent to 15,034.57 and South Korea’s Kospi edged up 0.1 per cent to 1,912.55.
Hong Kong’s Hang Seng dipped 0.1 per cent to 21,952.13 and the Shanghai Composite Index in mainland China added 0.1 per cent to 2,035.63.
In currencies, the dollar slipped to 102.57 Japanese yen from 102.60 yen in late trading Monday. The euro dipped to $1.3674 from $1.3676.
Benchmark crude for March delivery was up 7 cents to $95.79 in electronic trading on the New York Mercantile Exchange. The contract fell 92 cents to settle at $95.72 on Monday.
