US equities rise on dovish Powell

Stocks resume their climb

Fed Chairman Jerome Powell stuck to his script last night, as he beat the transitory inflation drum and dampened expectations of a  rate hike. Although the reaction in markets was not spectacular, Powell’s comments greenlighted a further recovery in US stocks overnight, with technology leading the way as the Nasdaq climbed 0.79%. Meanwhile, the S&P 500 rose 0.51%, while the Dow Jones edged 0.20% higher. Futures on all three have increased around 0.20% today, further underpinning sentiment in Asia.

Japan markets have paused for breath after a wild couple of days, the Nikkei creeping just 0.10% higher, while the Kospi has rallied by 0.45%. Mainland China is also enjoying a positive day, with the Shanghai Composite and CSI 300 rising by 0.45% and 0.75%, respectively, while Hong Kong, home to many China technology behemoths, has leapt 1.50% higher.

Singapore has risen 0.55% after Global Foundries announced a USD4 billion investment and vote of confidence in the city-state. Kuala Lumpur bucks the trend, falling 0.30%, with Taipei rising 0.30% while Jakarta remains unchanged.

Rising Covid-19 cases in Sydney have prompted other states and New Zealand to close their borders to Sydney travellers. That appears to have sapped sentiment, with tourism also likely to take a hit, as it comes just before the school holidays. That sees the ASX 200 falling 0.40%, while the All Ordinaries has fallen by 0.30%. The trajectory of the Sydney outbreak may well subsume other directional indicators for Australian stock markets for the rest of the week.

Like Wall Street overnight, Asian markets that are more high-tech-heavy appear to be modestly outperforming this afternoon. European markets should open modestly higher ahead of their PMI dump, but markets will still be vulnerable to headline and Fed-speak whipsaws for the rest of the week.

A softer Durable Goods and PCE Prices from the US tomorrow may also dampen the taper-tantrum nerves, which have calmed considerably since last week.

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