* MSCI ACWI at 21-month high
* Investors expect Fed to cut rates, focus on policy outlook
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, Oct 30 (Reuters) - A rally in global shares stalled,
with Asian markets stuck in tight ranges early on Wednesday, as
the prospect of a rate cut by the Federal Reserve was countered
by worries a Sino-U.S. first-stage trade deal could be delayed.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 0.16% from Tuesday's three-month high
while Japan's Nikkei .N225 slid 0.07% after hitting a one-year
high the previous day.
On Wall Street, the S&P 500 index eked out a record intraday
high, led by strong earnings from drug manufacturers such as
Merck MRK.N and Pfizer PFE.N , though a disappointing profit
report from Google parent Alphabet GOOGL.O kept the
technology-rich Nasdaq in the red.
Markets had erased gains after Reuters reported a U.S.
administration official said an interim trade agreement between
Washington and Beijing might not be completed in time for
signing in Chile next month as expected. But the official added that it did not mean the accord was
falling apart, which helped limit the damage to overall market
sentiment.
The S&P 500 .SPX ended down 0.08% and the Nasdaq Composite
.IXIC 0.59%.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.42% on Tuesday to end at a 21-month high, having
rallied 2.6% so far this month.
For the past few weeks, global equities have drawn support
from hopes for a trade compromise between the United States and
China, as well as from expectations of further U.S. monetary
policy loosening.
Investors now expect the Fed to cut interest rates by 0.25
percentage point for the third time this year later in the day.
"With a cut today completely priced in, markets are looking
to the Fed's stance on its policy outlook," said Masahiro
Ichikawa, senior strategist at Sumitomo Mitsui DS Asset
Management.
While Fed funds rate futures 0#FF: fully price in a 25-
basis-point cut on Wednesday, only about a 30% chance of another
cut in December has been priced in, compared with about 70%
earlier this month.
"The Fed will probably try to avoid sounding too dovish. Its
message will essentially be that while it could act in December
if needed, it won't unless there are big uncertainties on the
economy," said Sumitomo Mitsui's Ichikawa.
Fading expectations of aggressive rate cuts by the Fed have
lifted the two-year U.S. bond yield to 1.644% US2YT=RR ,
compared with a two-year low of 1.368% set in early October.
The 10-year U.S. Treasuries yield stood at 1.833%
US10YT=RR , near a 1-1/2-month high of 1.860% touched earlier
this week.
That has helped to lift the dollar against the yen. The
dollar was traded at 108.87 yen JPY= , after having hit a
three-month high of 109.07 yen
The euro stood at $1.11135 EUR= , having bounced off from
Tuesday's low of $1.10735.
Sterling was little changed after Britain decided to hold an
election on Dec. 12 following Prime Minister Boris Johnson
winning approval from parliament for an early ballot aimed at
breaking the Brexit deadlock. While Johnson seeks to gain a parliamentary majority to
ratify his Brexit deal, the election would be highly
unpredictable as Brexit has fatigued and enraged swathes of
voters, while eroding traditional loyalties to the two major
parties, Conservative and Labour.
The currency last traded at $1.2866 GBP=D4 ,
Oil prices were little changed, with Brent crude LCOc1
futures up 0.02% at $61.60 a barrel. U.S. West Texas
Intermediate (WTI) crude CLc1 lost 0.13% to $55.47 per barrel.
(Editing by Jacqueline Wong)