Fed Chair Jerome Powell's remarks to lawmakers will be closely followed for an idea about its monetary policy plans
Hong Kong (AFP) - Asian markets mostly rose Tuesday as traders geared up for this week’s release of key US jobs data and Federal Reserve chief Jerome Powell’s testimony to lawmakers.
His remarks will be closely followed for an idea about the central bank’s plans as it ramps up interest rates to quell inflation.
A recent run of figures has suggested the world’s top economy continues to run hot and inflation is not coming down as quickly as hoped, putting pressure on the Fed to keep hiking borrowing costs.
Several officials have lined up to warn that rates would have to go higher and be held there for some time.
The prospect of more tightening has dealt a blow to investors who had grown optimistic the Fed would be able to cut rates by the end of the year.
OANDA’s Edward Moya said traders were looking at two or three more quarter-point rises before the Fed holds fire.
He added: “This week will likely deliver a make-or-break moment for risk appetite as we will hear Fed Chair Powell’s testimony to Congress and find out if the hot January jobs report was an aberration.
“Stocks probably won’t be able to have a meaningful rally until we hear from… Powell.”
Powell is due to speak to lawmakers on Tuesday and Wednesday, while the closely watched non-farm payrolls report for February is set to be released Friday.
That comes after January’s reading showed more than half a million new jobs were created, far more than expected.
“The key focus will be on how Powell sees the US labour market, and whether the (policy board) think that economic conditions have improved or deteriorated since the last Fed meeting,” said Michael Hewson at CMC Markets.
“Markets will also be paying attention to whether Powell continues to peddle the same narrative of disinflation, which was a hallmark of his last press conference. If he acknowledges that inflation could be much stickier than the Fed thought over a month ago, that could prompt a pullback in US equity markets.”
Tokyo, Sydney, Singapore, Seoul, Mumbai, Bangkok, Taipei, Wellington and Manila rose.
Hong Kong and Shanghai erased earlier gains to sit in negative territory in the afternoon as data showed Chinese imports and exports fell in January and February.
The gains came after a tepid lead from Wall Street and a soft performance Monday in Asia after China set a lower-than-expected target for economic growth this year.
The news dented hopes for fresh government stimulus, though observers said it could benefit the global economy as a powerful Chinese recovery would likely further fan inflation.
“China reopening trades have severely underperformed, with Asian equities being some of the worst-performing indices this year,” said SPI Asset Management’s Stephen Innes.
“It is unclear if this merely reflects a positioning unwind or a market downgrade of China’s reopening prospects.”
- Key figures around 0700 GMT -
Tokyo - Nikkei 225: UP 0.3 percent at 28,309.16 (close)
Hong Kong - Hang Seng Index: DOWN 0.7 percent at 20,468.30
Shanghai - Composite: DOWN 1.1 percent at 3,285.10 (close)
Euro/dollar: DOWN at $1.0679 from $1.0684 on Monday
Pound/dollar: UP at $1.2035 from $1.2023
Euro/pound: DOWN at 88.72 pence from 88.84 pence
Dollar/yen: DOWN at 135.91 yen from 135.95 yen
West Texas Intermediate: UP 0.1 percent at $80.53 per barrel
Brent North Sea crude: UP 0.1 percent at $86.27 per barrel
New York - Dow: UP 0.1 percent at 33,431.44 (close)
London - FTSE 100: DOWN 0.2 percent at 7,929.79 (close)