Asian markets make nervous start ahead of Fed decision

Asian markets opened cautiously on Wednesday as investors awaited the Federal Reserve's decision on interest rates. The MSCI Asia-Pacific index saw a mixed performance, fluctuating between gains and losses. It closed up 0.2%, rebounding from four days of consecutive declines. The S&P 500 futures were slightly higher by 0.1%. Overnight, the S&P 500 dropped 0.5%, its second consecutive day of losses, as the 10-year Treasury bond yield reached its highest since 2007.

Tony Sycamore, a market analyst at IG in Sydney, stated that the US equity markets closed lower due to rising Treasury yields, a further increase in crude prices, and a heated debate over artificial intelligence development. The 10-year Treasury bond yield dropped to 4.9875% in Asian trade after surpassing the 5% mark for the first time in three years, just before the Federal Reserve's policy announcement and Fed Chair Kevin Warsh's media conference.

Traders predicted a 25 basis point rate hike, with a 92.4% probability based on the CME Group's FedWatch tool, up from 59.4% a week prior. Meanwhile, the US dollar index near a two-week high at 99.656. Oil prices declined as Asian markets opened, with Brent crude futures falling 0.6% to $108.08 a barrel after a 2.9% surge on Tuesday.

This decline came after shipping industry reports said crude loadings at Saudi Arabia's Red Sea export hub of Yanbu were halted, and Riyadh canceled deliveries to European customers. Digital assets continued to lose value after the US Senate voted against advancing comprehensive cryptocurrency legislation backed by President Trump. Bitcoin dropped 0.1% to $75,816.24, while ether fell 0.2% to $2,403.27.