Asia stocks gain, dollar steady after Powell comments

Equities markets in Asia-Pacific rose on Wednesday while the dollar held at a three-week low following testimony from the Federal Reserve chairman that reiterated the central bank’s patient stance.

Geopolitics is also in focus with US President Donald Trump and North Korean leader Kim Jong Un set to meet at a summit in Vietnam to discuss denuclearisation of the Korean peninsula.

Chinese stocks were among the best performers in the region with the CSI 300 up 1 per cent in the wake of its best day in over three years at the start of the week. The index rallied 6 per cent to its highest since June on Monday, rocketing into bull territory.

Morgan Stanley has raised its targets for China equities, citing policy stimulus and support as well as trade developments, forecasting the CSI 300 will gain 15 per cent by December.

“We have observed significant sentiment improvement since the Chinese New Year, and believe this is a long-due result of a series of policy makers’ efforts aimed at improving the A-share market dynamics and momentum,” Laura Wang, equity strategist said in a note. 

The Hang Seng index was up 0.6 per cent as financial stocks gained 0.7 per cent and consumer cyclicals were up 0.6 per cent. Hong Kong recorded its slowest economic growth in almost three years in the final quarter of 2018, the city’s financial secretary said in his annual budget, pointing to the effects of the trade war. 

In Japan, the Topix index was up 0.2 per cent, holding near a three-month closing high on Monday. 

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Australia’s S&P/ASX 200 was up 0.4 per cent with energy stocks rose 0.7 per cent as oil prices regained ground and the financials sector nudged up 0.4 per cent. Brent crude was up 0.7 per cent at $65.65 a barrel.

The moves in Asia come after lacklustre housing data provided a drag on Wall Street on Tuesday with the S&P 500 and ending the day 0.1 per cent lower. 

Currency market moves were relatively muted. Comments to a US Senate committee on Tuesday from Jay Powell, Federal Reserve chairman, maintained the central bank’s “patient” stance on interest rate changes, which sent the dollar to a three-week low. The dollar index, a measure of the greenback against a basket of peers was 0.1 per cent stronger on Wednesday. 

Sterling was holding near a six month high at $1.3244, after jumping on Tuesday on expectations that the deadline for the UK to leave the EU would be extended.



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