Another mixed day for Asian equities

Powell sends Fed hawkish message

Ukraine peace hopes after comments from Turkey over the weekend were quickly extinguished by the Fed’s Jerome Powell, who came out swinging on inflation fighting and potential rate hikes. That shifted the entire US yield curve higher and nipped any recovery by equities in the bud. US markets closed slightly lower.

The S&P 500 edged 0.04% lower, while the interest rate sensitive Nasdaq fell 0.38%, with the Dow Jones having a bout of growth nerves, falling 0.58%. In Asia, US futures have continued falling, led by the Nasdaq which is 0.40% lower, followed by the S&P 500 and Dow, which have fallen 0.20%.

That has been enough to weigh on Asian markets, which are digesting soaring oil prices and a very hawkish Jerome Powell overnight. The exceptions are Japan, which has returned from holiday, and Australia. Both markets can thank their still very dovish central bank heads for the rallies. The Nikkei 225 has jumped 1.50% higher, while Australia’s All Ordinaries and ASX 200 are 1.10% higher.

Elsewhere, the price action is unexceptional. The Kospi has traced out a 0.64% gain, but mainland China’s Shanghai Composite and CSI 300 are flat. The Hang Seng has risen by 1.0% after Alibaba increased its share buyback total to USD 25 billion. Singapore has fallen by 0.15%, with Taipei down 0.20%, Kuala Lumpur by 0.15%, while Jakarta had edged 0.35% higher on pumped-up commodity prices and the ending of visitor quarantine, in a boost to the tourism industry.

European markets were mostly negative overnight. None of the developments outlined above is likely to be supportive, and the Eurozone probably needs a sliver of good news on the Ukraine news ticker to prevent equities from heading south again today.

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