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Asian stocks gain on tech, Powell’s rate outlook: markets wrap

Asian stocks gain on tech, Powell’s rate outlook: markets wrap
People climb the rocks in Central Park after heavy snowfall in New York, New York, USA, 13 February 2024. EPA-EFE/SARAH YENESEL

Most stocks in Asia rose on Thursday, powered by technology shares and the Federal Reserve chairman’s comments that interest rates will likely fall this year. The yen rallied to the strongest level in a month against the dollar.

Shares from Australia to China gained, pushing a regional gauge up for a second day. Japan bucked the trend, weighed down by the yen’s strength that hurts exporters. US futures edged lower after the S&P 500 Index rose 0.5% on Wednesday to reclaim its 5,100 mark, and the tech-heavy Nasdaq 100 advanced 0.7%.

Tech stocks took the centre stage, with Chinese e-commerce giant JD.Com up nearly 10% in Hong Kong after it initiated a $3-billion share buyback program and reported consensus-beating sales growth. Taiwan Semiconductor Manufacturing Co. rallied as much as 4.5% after Nvidia Corp. rose to a record high following Moody’s upgrade. 

“One may note that previous attempts to bounce have been short-lived” for Chinese tech stocks given still-weak fundamentals in China’s economy, said Jun Rong Yeap, a market strategist at IG Asia Pte.

The yen strengthened below 150 per dollar on Wednesday, partly aided by the fastest pace of wage growth since June. The Bank of Japan is under pressure to end its negative interest rate policy, a move most economists expect to see this month or next. The central bank is said to have a tacit greenlight from some government officials for the move, while investors will also watch for further insights from the BOJ when its board member Junko Nakagawa speaks later on Thursday.

An index of the dollar edged lower after a decline on Wednesday when US yields fell. The 10-year benchmark was steady in Asia after shedding five basis points to 4.1% in the prior session. 

Fed chair Jerome Powell said in testimony to a House of Representatives panel that while he sees no urgency in cutting rates given the strength of the US economy, it would likely be appropriate to do so “at some point this year”.

“While Powell didn’t commit to rate reductions in the near future, his positivity concerning the trajectory of inflation amidst confidence that the central bank’s current rate is likely at its peak is enough for market participants,” said Jose Torres at Interactive Brokers.

The Fed chair also said US regulators will probably tweak rules requiring lenders to hold more capital — a win for Wall Street banks. Separately, commercial property lender New York Community Bancorp received a $1-billion equity investment, stemming a sharp decline in its stock price.

US job openings data remained elevated, while private payrolls registered another strong month of increases in February, albeit slightly below estimates. The Fed’s Beige Book survey showed the US economy has expanded at a modest pace since earlier in the year, while consumers showed more sensitivity to rising prices.

In Asia, data set for release includes Australian trade data, Taiwan inflation and China trade and foreign reverse reports while Malaysia will hand down a monetary policy decision.

Elsewhere, WuXi AppTec Co. tumbled after a US Senate committee advanced a bill on Wednesday that may ban Chinese biotech firms and some others from federal contracts.

Meanwhile, Bitcoin recovered most of its losses to move back above $66,000 after touching a high earlier in the week. Gold steadied after its recent record-setting run as gains for the cryptocurrency and precious metal sent mixed messages to market participants.

Oil was flat after rising on Wednesday to push West Texas Intermediate 1.3% higher. Further tension in the Middle East included the first confirmed deaths of commercial crew after Houthi militants began attacks in the region.

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