Asian Markets Mixed On Powell Remarks

Asian stock markets are trading mixed on Wednesday, following the broadly positive cues from Wall Street overnight, in reaction to US Federal Reserve Chair Jerome Powell’s remarks at the Economic Club of Washington that he expects 2023 to be a year of “significant declines in inflation.” He also cautioned that interest rates could rise more than markets expect if the economic data doesn’t cooperate. Asian markets closed mixed on Tuesday.

“The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said at the event. “But it has a long way to go. These are the very early stages.”

The Australian stock market is trading modestly higher on Wednesday, recouping some of the losses in the previous two sessions, with the benchmark S&P/ASX 200 staying above the 7,500 levels, following the broadly positive cues from Wall Street overnight, as traders reacted positively to US Federal Reserve Chair Jerome Powell’s remarks that disinflation has begun in 2023, even as they continue to digest the ninth consecutive interest rate hike by the Reserve Bank of Australia.

The benchmark S&P/ASX 200 Index is gaining 22.60 points or 0.30 percent to 7,526.70, after touching a high of 7,534.10 earlier. The broader All Ordinaries Index is up 23.50 points or 0.31 percent to 7,736.60. Australian stocks ended notably lower on Tuesday.

Among major miners, BHP Group and OZ Minerals are edging up 0.1 percent each, while Fortescue Metals and Mineral Resources are gaining more than 1 percent each. Rio Tinto is adding almost 1 percent.

Oil stocks are mixed. Woodside Energy and Santos are edging up 0.3 percent each, while Beach energy is losing almost 2 percent and Origin Energy is edging down 0.1 percent.

In the tech space, Appen is surging more than 9 percent, Zip is adding almost 1 percent and Xero is edging up 0.5 percent, while WiseTech Global is edging down 0.2 percent and Afterpay owner Block is losing almost 1 percent.

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

Among gold miners, Newcrest Mining is gaining more than 1 percent, Gold Road Resources is edging up 0.1 percent and Northern Star Resources is edging up 0.4 percent, while Evolution Mining is down almost 1 percent. Resolute Mining is flat.

In other news, shares in Boral are surging more than 11 percent after the building materials company reported higher revenues in the six months to December. However, it decided not to pay a dividend.

In the currency market, the Aussie dollar is trading at $0.696 on Wednesday.

The Japanese stock market is notably lower on Wednesday after opening in the green, extending the slight losses in the previous session, with the Nikkei 225 falling below the 27,600 level, despite the broadly positive cues from Wall Street overnight, dragged by sharp losses at index heavyweights SoftBank Group and Nintendo.

SoftBank Group is slipping more than 6 percent after reporting a net loss of around $6 billion in the December quarter, while Nintendo is plunging more than 7 percent after it slashed sales forecast for the Nintendo Switch console,

The benchmark Nikkei 225 Index closed the morning session at 27,543.39, down 142.08 points or 0.51 percent, after hitting a low of 27,458.53 earlier. Japanese stocks ended slightly lower on Tuesday.

Market heavyweight SoftBank Group is sliding more than 6 percent, while Uniqlo operator Fast Retailing is losing more than 1 percent. Among automakers, Honda is down more than 1 percent and Toyota is flat.

In the tech space, Screen Holdings is gaining almost 1 percent, Advantest is advancing almost 2 percent and Tokyo Electron is edging up 0.2 percent.

In the banking sector, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial are edging up 0.3 percent each, while Mizuho Financial is edging down 0.1 percent.

Among the major exporters, Canon is losing more than 1 percent, while Sony and Panasonic are edging down 0.3 to 0.5 percent each. Mitsubishi Electric is flat.

Among the other major losers, Sharp is plummeting almost 11 percent and Marui Group is plunging almost 8 percent, while Nintendo and Furukawa Electric are sliding more than 7 percent each. Yokogawa Electric is slipping more than 6 percent, while Mitsui Mining, Taiyo Yuden and IHI are losing more than 3 percent each.

Conversely, GS Yuasa is surging more than 6 percent, while Kyowa Kirin and Mitsubishi Chemical are gaining almost 6 percent each. Nichirei is adding more than 4 percent and Daiichi Sankyo is advancing more than 3 percent.

In economic news, Japan had a current account surplus of 33.4 billion yen in December, the Ministry of Finance said on Wednesday. That missed expectations for a surplus of 98 billion yen following the 1.804 trillion yen surplus in November. For all of 2022, the current account surplus was 11.443 trillion yen, down from 21.591 trillion yen in 2021.

Overall bank lending in Japan was up 3.1 percent on year in January, the Bank of Japan said on Wednesday – coming in at 599.178 trillion yen. That exceeded expectations for an increase of 2.5 percent and was up from 2.7 percent in December. Excluding trusts, lending jumped an annual 3.5 percent to 522.145 trillion yen, up from 3.0 percent in the previous month.

In the currency market, the U.S. dollar is trading in the lower 131 yen-range on Wednesday.

Elsewhere in Asia, South Korea and Taiwan are up 1.1 percent each, while New Zealand and Singapore are up 0.5 and 0.3 percent, respectively. China, Hong Kong and Malaysia are lower by between 0.2 and 0.5 percent each. Indonesia is relatively flat.

On Wall Street, stocks closed on a buoyant note on Tuesday thanks to strong buying at several counters despite staying weak till noon and suffering a setback after a subsequent recovery. Positive reaction to Federal Reserve Chair Jerome Powell’s remarks at the Economic Club of Washington lifted the market up.

The major averages all ended with impressive gains. The Dow ended higher by 265.67 points or 0.78 percent at 34,156.69. The S&P 500 closed up 52.92 points or 1.29 percent at 4,164.00, while the Nasdaq climbed 226.34 points or 1.9 percent to 12,113.79.

The major European markets closed on a mixed note with investors largely making cautious moves amid concerns about slowing global economy, and geopolitical tensions. The U.K.’s FTSE 100 gained 0.36 percent, while Germany’s DAX and France’s CAC 40 edged down 0.16 percent and 0.07 percent, respectively.

Crude oil futures advanced Tuesday on expectations of higher energy demand from China, and on supply concerns following a massive earthquake in Turkey on Monday. West Texas Intermediate Crude oil futures for March ended higher by $3.02 or 4.1 percent at $77.14 a barrel, the highest close since January 31.

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