Asian Stocks Down As Fed Chair Powell Keeps Hawkish Heat On
- Asian stock markets were mixed but most posted gains
- Investors hope Jerome Powell won’t ratchet up the hawkish rhetoric
- A wider trade gap weighed on the New Zealand Dollar
Asian stocks were hard put Wednesday as a combination of hawkish commentary from Federal Reserve Chair Jerome Powell and some lackluster local economic data saw plenty of red on the mainboards.
In his first Congressional testimony since taking over from Janet Yellen, Powell sounded confident on US economic prospects and left investors wondering if a market downturn would derail rate hikes, all else being equal. China’s manufacturing Purchasing Managers Index disappointed, as did Japan’s industrial production and retail sales.
The US Dollar was broadly stronger as that Powell testimony boosted US rate-hike bets. However, it didn’t hold up against everything in Asia. The Japanese Yen made notable gains following a very modest reduction in ultra-long bond buying from the Bank of Japan. It is extremely unlikely that this does actually amount to the stimulus withdrawal that some investors think it is, however their belief was strong enough to send the Yen higher Wednesday.
Still on the schedule for the rest of global Wednesday, the Eurozone Consumer Price Index and Germany’s official employment figures. From the US will come a second look at Gross Domestic Product for the old year’s final quarter, along with pending home sales, mortgage application levels and crude oil inventory stats from key delivery node Cushing, Oklahoma.
--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.