Markets mixed in cautious trade ahead of central bank decisions

HONG KONG, China — Equity markets were mixed Tuesday as investors jockey ahead of a slew of central bank decisions, key economic data and earnings from tech titans this week.

While last week's US inflation report further stoked optimism that the Federal Reserve will cut interest rates at least once this year, traders became more cautious after Monday's rally.

The US central bank is expected to stay put on monetary policy Wednesday, but its post-meeting statement will be pored over in hopes of confirmation it will lower borrowing costs in September.

Boss Jerome Powell ramped up bets on a move earlier this month when he said officials did not need to see inflation hit their two percent target before cutting.

A string of figures indicating prices were under control and the labour market was softening have helped fuel confidence that easing is on the way, with some market-watchers suggesting there could be three cuts before January.

The release of figures on US jobs creation and openings is also in sight this week, which could have some impact on the bank's thinking.

The Fed gathering concludes hours after the Bank of Japan makes a much-anticipated decision, with speculation swirling over whether it will hike rates again, having lifted them for the first time in 17 years back in March.

BoJ chief Kazuo Ueda has been tight-lipped about what decision-makers will say, though he is expected to lay out a plan for winding down the bank's bond-buying, which has helped keep borrowing costs ultra-low for years.

But Katsutoshi Inadome, senior strategist at SuMi TRUST, said an interest rate move was unlikely just yet.

"A rate hike this month, combined with detailed plans to scale back Japanese Government Bond (JGB) purchases, would excessively disrupt the market, and cause yen appreciation which would hurt domestic equities," he warned in a commentary.

"The only situation in which a rate hike would appear the wisest course is if the yen weakens excessively.

"The reduction (in JGB purchases) is expected to occur in stages, considering the economic impact as well as the market's reaction."

He added that he did not expect "a clear outlook for interest rate hikes as (the bank)