Asian stock markets were mixed Thursday as investors opted for caution ahead of the U.S. Federal Reserve's policy announcement later in the day.
Japanese benchmark Nikkei gained 0.39 percent or 35.19 points to 8995.15, South Korean KOSPI Composite advanced 0.03 percent and India's BSE Sensex gained 0.10 percent while Chinese Shanghai Composite declined 0.76 percent or 16.18 points to 2110.38 and Hong Kong's Hang Seng fell 0.14 percent or 27.76 points to 20047.63.
Market participants are waiting for the Federal Open Market Committee's (FOMC) statement on the monetary policy later in the day. Investors are hoping that the recent batch of disappointing economic readings, including the weaker-than-expected U.S. non-farm payroll data, will force the policymakers to announce further monetary easing measures to bolster the world's largest economy.
"We believe the FOMC will extend its forward guidance on the level of the Fed funds rate and announce a new large-scale asset purchase program at its September 13th meeting. FOMC might opt for an open-ended program with a monthly purchase of, say, $50-$60 billion in security purchases that would continue until the committee believes they are no longer needed," said a note from Credit Agricole.
The minutes from the most recent FOMC meeting noted that many members saw that additional stimulus might be warranted "fairly soon" unless new data indicated a sustainable strengthening in the pace of recovery. At the Economic Policy Symposium at Jackson Hole in Wyoming Aug. 31, U.S. Federal Reserve Chairman Ben Bernanke said the central bank would take additional measures if necessary, which was taken as an indication of a stronger push for QE3.
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Last Friday, the U.S. Labor Department reported that only 96,000 jobs were added in August, far worse than economists' expectation of 145,000. The world's largest economy needs employment growth of 100,000 just to maintain "stability" in the job market. But this is the fourth time in the past five months that it has added fewer than 100,000 jobs, which is disappointing by any measure.
However, some analysts are warning that high hopes are priced in and there was room for disappointment which could result in pronounced sell-offs.
"There's lots of counter-arguments on both sides. If you look at the employment reports we've had for the last couple of months, you'd say they're definitely going to do something. If you take a more holistic view of the economy you would be more reticent. Deep down, Bernanke's comments suggest they're probably going to do something, but exactly what form it's going to take remains to be seen," Nic Brown, head of commodity research at Natixis in London, told Reuters.
Shipping and technology shares advanced in Tokyo. Kawasaki Kisen Kaisha Ltd. climbed 6.32 percent and Nippon Yusen K.K surged 4.48 percent while Sony Corp. gained 2.15 percent and Panasonic Corp. rose 1.83 percent.
In Hong Kong, Poly Property Group Co. Ltd. surged 3.63 percent and Agile Property Holdings Ltd. gained 1.86 percent while Bank of Communications Co. Ltd. declined 1.36 percent.
South Korean shares pared earlier losses and ended flat after the Bank of Korea unexpectedly left its key policy rate unchanged. LG Display Co. Ltd. declined 1.99 percent and SK Hynix Inc. fell 1.58 percent while Samsung Electronics Co. Ltd. advanced 0.54 percent.