Asian Shares Advance On Powell's Less Hawkish Testimony

stockmarkets jan04 12jan22 lt

Asian stocks posted strong gains on Wednesday after Federal Reserve Chair Jerome Powell did not provide any new details on interest rates at his Senate confirmation hearing.

Powell has made it clear interest rates will increase if inflation persists but also said he expects some of the supply chain problems that are pushing up prices will ease in the middle of this year.

Investors also digested Chinese inflation data and looked ahead to the release of U.S. December inflation data later in the day for further clues on the rate outlook.

Chinese shares rose notably as data showed inflationary pressure in the county eased further in December, thanks to lower food and commodity prices.

The benchmark Shanghai Composite Index advanced 29.99 points, or 0.8 percent, to 3,597.43, while Hong Kong's Hang Seng Index soared 663.11 points, or 2.8 percent, to 24,402.17, led by tech stocks.

Consumer prices in China were up 1.5 percent year-on-year in December, the National Bureau of Statistics said earlier today. That was shy of expectations for an increase of 1.8 percent and was down sharply from 2.3 percent in November.

The bureau also said that producer prices climbed an annual 10.3 percent, missing forecasts for an increase of 11.1 percent and slowing from 12.1 percent a month earlier.

China largely tamed its initial coronavirus outbreak with a mix of lockdowns, border closures and mass testing, but a recent flare up of cases, notably in Tianjin, has weighed on the growth outlook for the first quarter before the upcoming Spring Festival and the Winter Olympics.

Japanese shares rallied to snap a three-day losing streak. The Nikkei 225 Index ended up 543.18 points, or 1.9 percent, at 28,765.66 after having struck a nearly three-week low the previous day amid concerns over resurging coronavirus cases in the country. The broader Topix closed 1.6 percent higher at 2,019.36.

Heavyweights topped the gainers list, with technology investor SoftBank Group surging 6 percent and Fast Retailing, the operator of the Uniqlo casual clothing chain, rising 1.8 percent.

Tokyo Electron, a semiconductor equipment maker, jumped 3.8 percent, tracking gains among its U.S. peers overnight.

Australian markets gained ground, led by technology and resource-related stocks. The benchmark S&P/ASX 200 Index climbed 48.80 points, or 0.7 percent, to 7,438.90, while the broader All Ordinaries Index ended up 51.50 points, or 0.7 percent, at 7,762.20.

Buy now, pay later darling Afterpay soared 4.8 percent after saying it received an approval for its takeover. Strong commodity prices lifted miners, with heavyweights BHP and Rio Tinto rising 1.1 percent and 0.9 percent, respectively.

Gold miners Evolution, Northern Star Resources and Newcrest rallied 2-3 percent after bullion prices climbed. Woodside Petroleum and Santos jumped around 4 percent each after oil prices spiked nearly 4 percent overnight.

Seoul stocks rose the most in six weeks, as investors appeared pleased with a less-hawkish stance by Powell. The Kospi jumped 45.10 points, or 1.5 percent, to close at 2,972.48, logging the sharpest rise since December 2. Naver, Samsung Biologics and LG Chem soared 3-5 percent.

New Zealand shares ended modestly lower as travel-related stocks declined, driven by rising uncertainty around the Omicron variant. The benchmark NZX-50 Index slipped 27.25 points, or 0.2 percent, to 12,804.48.

Travel booking software firm Serko lost 5 percent and Tourism Holdings tumbled 4 percent. Church donation platform Pushpay Holdings bounced back from an 18-month low to close 4.1 percent higher.

U.S. stocks bounced back overnight and Treasury yields retreated in choppy trading, as investors absorbed remarks from Powell indicating interest rates are likely to rise this year but monetary policy will take a broad and forward-looking view, keeping pace with an ever-evolving economy.

The tech-heavy Nasdaq Composite jumped 1.4 percent, while the S&P 500 added 0.9 percent and the Dow rose half a percent.

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