Powell Comments Push Asian Markets Higher

Asian stock markets are mostly higher on Wednesday, following the broadly positive cues overnight from Wall Street, as traders indulged in buying after US Fed Chair Jerome Powell’s positive comments about the strength of the economy and news of lifting of lockdown restrictions in China. Asian Markets closed mostly higher on Tuesday.

Persistent inflation and aggressive rate hikes had stoked concerns about a potential recession. Powell said he is confident that the central bank can raise rates and deal with inflation without sending the economy into recession. He added that the economy is strong and is well positioned to withstand less accommodative monetary policy.

The expectations of demand revival in China also boosted market sentiment after Shanghai pledged to gradually ease its COVID-19 lockdown restrictions in stages in June. Shanghai is seeing a strong recovery from COVID cases.

The Australian stock market is significantly higher on Wednesday, extending the gains in the previous three sessions, with the benchmark S&P/ASX 200 just below the 7,200 level, following the broadly positive cues overnight from Wall Street, driven by gains in materials and technology stocks. Traders also digested the hawkish comments made by US Fed Chair Jerome Powell on the outlook for interest rates and the economy.

The Reserve Bank of Australia also revealed in the minutes of its May meeting that the central bank could further increase interest rates in June. The minutes show the cash rate could increase to 1.75 percent by the end of the year and hit 2.5 percent by the end of 2023.

The benchmark S&P/ASX 200 Index is gaining 60.70 points or 0.85 percent to 7,173.20, after touching a high of 7,199.00 earlier. The broader All Ordinaries Index is up 65.00 points or 0.88 percent to 7,415.60. Australian stocks ended modestly higher on Tuesday.

Among major miners, OZ Minerals is gaining more than 4 percent, Rio Tinto is up more than 2 percent, Fortescue Metals is adding more than 1 percent, Mineral Resources is rising 3.5 percent and BHP Group is advancing more than 3 percent.

Oil stocks are mostly lower. Woodside Petroleum is edging down 0.3 percent and Beach energy is losing more than 1 percent, while Santos is edging up 0.5 percent. Origin Energy is flat.

In the tech space, WiseTech Global and Appen are gaining more than 2 percent each, while Xero is adding almost 1 percent, Zip is up more than 1 percent and Afterpay owner Block is advancing more than 3 percent.

Among the big four banks, ANZ Banking is gaining more than 1 percent and Westpac is edging up 0.3 percent, while Commonwealth Bank and National Australia Bank are flat.

Among gold miners, Gold Road Resources and Northern Star Resources are gaining almost 1 percent each, while Newcrest Mining is edging up 0.3 percent, Resolute Mining is adding almost 2 percent and Evolution Mining is up 1.5 percent.

In the currency market, the Aussie dollar is trading at $0.701 on Wednesday.

The Japanese stock market is sharply higher on Wednesday, extending the gains in the previous three sessions, with the Nikkei 225 moving above the 26,800 level, following the broadly positive cues overnight from Wall Street, as traders reacted to better-than-expected GDP data. They also reacted to the hawkish comments made by US Fed Chair Jerome Powell on the outlook for interest rates and the economy.

The benchmark Nikkei 225 Index closed the morning session at 26,851.15, up 191.40 points or 0.72 percent, after touching a high of 27,053.18 earlier. Japanese stocks closed modestly higher on Tuesday.

Market heavyweight SoftBank Group is gaining almost 2 percent, while Uniqlo operator Fast Retailing is edging down 0.4 percent. Among automakers, Honda is adding almost 2 percent and Toyota is edging up 0.5 percent.

In the tech space, Screen Holdings is edging up 0.3 percent, Advantest is gaining 1.5 percent and Tokyo Electron is adding more than 2 percent.

In the banking sector, Mizuho Financial is gaining more than 2 percent, Sumitomo Mitsui Financial is adding almost 2 percent and Mitsubishi UFJ Financial is up almost 1 percent.

Among the major exporters, Sony is gaining almost 2 percent, Canon is adding almost 1 percent and Mitsubishi Electric is edging up 0.4 percent, while Panasonic is losing almost 1 percent.

Among the other major gainers, M3, Fujitsu, IHI and Japan Steel Works are advancing more than 4 percent, while Nissan Motor is adding almost 4 percent. Kawasaki Heavy Industries, NTT Data, Hino Motors, Nintendo, Asahi Group and Isuzu Motors are gaining more than 3 percent each.

Conversely, CyberAgent and Kikkoman are losing almost 3 percent each.

In economic news, Japan’s gross domestic product contracted an annualized 1.0 percent in the first quarter of 2022, the Cabinet Office said in Wednesday’s preliminary reading. That exceeded expectations for a decline of 1.8 percent following the downwardly revised 3.8 percent increase in the previous three months (originally 5.4 percent). On a seasonally adjusted quarterly basis, GDP slipped 0.2 percent – but that also beat forecasts for a fall of 0.4 percent following the downwardly revised 0.9 percent gain in the three months prior.

In the currency market, the U.S. dollar is trading in the lower 129 yen-range on Wednesday.

Elsewhere in Asia, Indonesia and Taiwan are up 1.4 and 1.0 percent, respectively, while New Zealand, Singapore, South Korea and Malaysia are higher by between 0.1 and 0.9 percent each. Hong Kong and China are down 0.7 and 0.5 percent, respectively.

On Wall Street, stocks stayed firm right through the day’s session after opening on a positive note Tuesday morning, and closed with strong gains thanks to sustained buying at several counters. Strong retail sales and industrial production data, some upbeat earnings updates and Fed Chair Jerome Powell’s positive comments about the strength of the economy helped lift sentiment.

The major averages all ended with impressive gains. The Dow ended with a gain of 431.17 points or 1.34 percent at 32,654.59. The S&P 500 settled higher by 80.84 points or 2.02 percent at 4,088.85, while the Nasdaq climbed 321.73 points or 2.76 percent to settle at 11,984.52, just a few points off the day’s high.

The major European markets also moved back to the upside following some encouraging economic data from the region. The U.K.’s FTSE 100 gained 0.72 percent, Germany’s DAX surged up 1.59 percent and France’s CAC 40 advanced 1.3 percent.

Crude oil prices pared early gains and settled lower Tuesday, reacting to reports that the Biden administration is set to ease some of the sanctions imposed on Venezuela. West Texas Intermediate Crude oil futures for June ended lower by $1.80 or 1.6 percent at $112.40 a barrel.