The highly-anticipated U.S. Federal Reserve policy meeting is set to begin tomorrow, and traders are shifting their focus this week to the outcome of the meeting after focusing mostly on the U.K. elections over the weekend. Asian markets were broadly lower on Monday morning largely due to the slide in U.S. tech stocks on Friday. South Korea’s Kospi lost 1.2 percent on Monday while Hong Kong’s Hang Seng Index was down 1.3 percent. Japan’s Nikkei 225 index eased 0.6 percent and MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8 percent. Wall Street markets were also lower on Friday which analysts believe dampened sentiment, even if one day of losses isn’t enough to paint a bigger picture of long-term market struggles. A high expectation of a Fed rate hike is also threatening U.S. markets, as the rate hike would likely bolster the dollar but lead to a selloff in equity markets.
The pound was slightly higher against the dollar on Monday after losing ground following a rough election at the end of last week during which the currency eased as much as 2.5 percent before reversing slightly. The sterling was trading at $1.2765 as of 7:12 a.m. GMT on Monday. The U.K. is expected to start Brexit negotiations next week, but a disastrous election last week is calling this possibility into question. Prime Minister Theresa May is scrambling to unite her Conservative Party in advance of the Brexit talks and analysts expect that market fluctuations due to the election outcome are largely complete and that further movements will be based on future events.