Asian markets trade mixed as chances of September US rate increase recede

Poor US ISM services and nonfarm payroll data has led traders to believe there will be no immediate rate hike.

Asian markets trade mixed as chances of a September US rate hike recedes — US ISM non-manufacturing PMI reading for August was the lowest levels recorded since February 2010 Reuters

Asian stock market indices were trading mixed on Wednesday (7 September), with the Shanghai Composite up 0.35% at 3,101.53 as of 6.07am GMT, following lower-than-expected US services data which reduced the chances of any immediate increase in US interest rates.

Data released on 6 September by the US Institute for Supply Management (ISM) showed that the non-manufacturing purchase managers' index declined to 51.4 in August from 55.5 in July. While a reading above 50 indicates expansion, this was the lowest level recorded since February 2010. These figures along with the poor nonfarm payroll data released last week prompted traders to believe that the American central bank will not increase rates this month.

"The [ISM] number is a serious miss and all but wipes out the chance of a Fed rate hike in September. If data continues to weaken, we will see the chances of December rate hike fall sharply as well," Anthony Darvall, chief market strategist at trading platform easyMarkets, was quoted as saying by CNBC.

Despite the poor ISM data, San Francisco Fed President John Williams in a speech on 6 September at Nevada, stressed that it still made sense to increase interest rates gradually, "preferably sooner rather than later".

However, Naeem Aslam, chief market analyst at ThinkMarkets, said this comment was to divert people's attention from the poor data. "Fed's William has added more colour to the US rate hike odds. You can say that it is pretty much a trend that after a weak or fragile data, we do get somewhat hawkish comments from various different Fed members, and they try to fade the effects of the data on the dollar," Aslam said.

Indices in the region were trading as follows at 6.20am GMT

Country	Index	Price	Up/Down	%Change
Hong Kong	Hang Seng Index	23,742.21	Down	0.19%
Japan	Nikkei 225	17,012.44	Down	0.41%
South Korea	KOSPI	2,067.38	Up	0.04%
India	CNX Nifty	8,941.85	Down	0.01%
Australia	S&P/ASX 200	5,424.20	Up	0.20%

Overnight (6 September), the Dow Jones Industrial Average closed at 18,538.12, up 0.25%, while the FTSE 100 closed at 6,826.05, down 0.78%.

Among commodities, oil prices were trading in the green amid the recent talks between Russia and Saudi Arabia to discuss ways to curb global crude oversupply. While WTI crude oil was trading higher by 0.22% at $44.93 (£33.48) a barrel, Brent crude was 0.15% higher at $47.33 a barrel as of 6.27am GMT.