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Asia markets mostly higher; Fed meeting set to kick off

Key Points
  • Asian stocks were mostly higher on Tuesday.
  • The Fed is scheduled to start a two-day monetary policy meeting on Tuesday stateside, when investors will look for clues about potential rate cuts.
  • Meanwhile, on the U.S.-China trade front, hundreds of businesses stateside are attempting to send a message to U.S. President Donald Trump's administration to discourage them from increasing tariffs on China.

Markets in Asia were mostly higher on Tuesday as investors awaited the start of a closely-watched meeting by the U.S. Federal Reserve, set to kick off later stateside.

Shares in mainland China rose on the day. The Shanghai composite was up slightly at 2,890.16 and the Shenzhen component gained 0.27% to 8,804.32, while the Shenzhen composite was higher by 0.163% to 1,504.57.

In Hong Kong, the Hang Seng index added more than 1%, as of its final hour of trading, with shares of Chinese tech heavyweight Tencent jumping more than 1.5%.

Over in South Korea, the Kospi gained 0.38% to close at 2,098.71 as shares of biopharmaceutical firm Celltrion rose 1.46%. Meanwhile, the in Australia added 0.6% to end its trading day Down Under at 6,570.00.

Japanese stocks bucked the overall trend. The Nikkei 225 slipped 0.72% to close at 20,972.71, as shares of index heavyweights Fast Retailing, Softbank Group and Fanuc fell. The Topix index also declined 0.72% to end its trading day at 1,528.67.

Asia-Pacific Market Indexes Chart

Central bank watch

The Fed is scheduled to start a two-day monetary policy meeting on Tuesday stateside. Expectations for any policy changes are low, but investors will look for clues about potential rate cuts this year.

"Recent speeches by Fed officials, including Fed chair Jay Powell, have indicated a growing wariness of the inflation outlook and a willingness to act if required. We expect the (Federal Open Market Committee) to formalise this view on Wednesday by hinting that near‑term cuts to the Fed funds rate are coming. We expect the Fed will cut the Fed funds rate in December, but the risk is skewed to earlier cuts," Kim Mundy, currency strategist at Commonwealth Bank of Australia, wrote in a note.

The Fed will make its monetary policy announcement on Wednesday.

One economist told CNBC that other central banks such as those in Japan and Indonesia, also set to have their own meetings later in the week, could take direction from the Fed.

"If the Fed is easing, it certainly means that they expect (that) the U.S. economy ... is slowing. If the U.S. economy is slowing, then very likely the global economy will be feeling that ... pain as well," Steve Cochrane, chief Asia Pacific economist at Moody's Analytics, told CNBC's "Squawk Box" on Tuesday.

That, he said, would give the central banks regionally "a chance to ease as well and try to add some stimulus."

US-China trade

Meanwhile, on the U.S.-China trade front, hundreds of businesses stateside are attempting to send a message to U.S. President Donald Trump's administration to discourage them from increasing tariffs on China.

That comes as U.S. Commerce Secretary Wilbur Ross says Trump is "perfectly happy " to impose new tariffs on China if the two economic powerhouses don't "make a deal."

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.427 after seeing levels below 97.4 yesterday.

The traded at 108.25 against the dollar after touching levels above 108.6 in the previous session.

The tumbled to $0.6830 as the minutes from the June policy meeting of the country's central bank showed that further monetary easing was "more likely than not, " and was necessary to push employment down. It last changed hands at $0.6839.

Oil prices were lower in the afternoon of Asian trading hours, with the international benchmark Brent crude futures contract dipping 0.61% to $60.57 per barrel, while U.S. crude futures declined 0.48% to $51.68 per barrel.

Tensions remained high in the Middle East following attacks on two oil tankers in the Gulf of Oman, with the Pentagon preparing to send about 1,000 more U.S. troops to the region.

"I think this is still mostly posturing on the part of the Trump administration," Jacob Shapiro, director of analysis at Geopolitical Futures, told CNBC's "Capital Connection" on Tuesday. "You're not gonna invade Iran or take out the Iranian navy just by deploying a couple of thousand extra troops to the region, that would have to be a much bigger deployment."

"We're still not talking a militarily significant deployment of U.S. troops here," he said.

— Reuters and CNBC's Fred Imbert contributed to this report.