- The Shanghai Composite is stuck in a sideways channel.
- Asian stocks are trading mixed with caution ahead of the Fed.
China’s benchmark equity index, the Shanghai Composite, is again lacking a clear directional bias.
The index is trapped in a 2956-2822 trading range since May 9 and the direction of the breakout will likely set the tone for the next big move.
A range breakdown would imply a continuation of the sell-off highs near 3280 seen in April. On the other hand, a range breakout would expose the 50-day average, currently at 3014.
As of writing, the index is trading at 2886, representing 0.16 percent gains on the day. Other Asian stocks are trading mixed with Australia’s S&P/ASX 200 shedding 0.27%. Stocks in New Zealand and South Korea are also flashing red, while Japanese stocks are reporting 0.48% gains.
The mixed action will likely continue, courtesy of caution ahead of Wednesday’s FOMC (Federal Open Market Committee) rate decision. The central bank is widely expected to keep rates unchanged at 2.25%.
Investors, however, will scrutinize the policy statement, economic forecasts and the interest rate dot plot for signals on the chances of rates cuts ahead.