Asian Stocks to Gain After Powell Allays Concerns: Markets Wrap
(Bloomberg) -- Stocks in Asia are set to trend higher after Federal Reserve Chair Jerome Powell calmed market fears at the end of last week by saying the US economy is fine and there was no hurry to adjust monetary policy.
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Equity index futures in Australia and Japan advanced while those in Hong Kong edged lower. US stocks recovered on Friday, with the S&P 500 closing up 0.6% after earlier falling as much as 1.3% and the Nasdaq 100 moving away from the threshold of a correction to end the day marginally higher. Bonds fell and the greenback slipped to cap its worst week since 2022.
A myriad of headlines around the economy, tariffs and geopolitical developments combined for a roller-coaster week for markets. While Powell acknowledged a rise in uncertainty for the US economic outlook, he said officials didn’t need to rush to cut interest rates. Furthermore, he expected the path to 2% inflation to continue, suggesting price hikes from tariffs may be temporary.
Powell “appeared calm on growth, pleased with the progress occurring on inflation and somewhat dismissive of the recent rise in inflation expectations,” Vital Knowledge founder Adam Crisafulli said, noting that the Fed Chair’s words “clearly had a positive effect on markets.”
Treasury yields rose Friday and the dollar lifted off lows after Powell’s comments as the market tamped down expectations the central bank may resume cutting interest rates as soon as May. Bonds have been caught between signs that US economic growth is slowing and sticky inflation in the past month.
US job growth steadied last month while the unemployment rate rose — a mixed snapshot of the labor market. Nonfarm payrolls increased 151,000 in February after a downward revision to the prior month. The unemployment rate climbed to 4.1%.
“Friday’s jobs report was weaker than expected, which is concerning because this report doesn’t account for the recent government job cuts from DOGE,” said Glen Smith, chief investment officer at GDS Wealth Management. He added that the report “suggested that businesses are taking a pause on hiring until there is more certainty about tariff policy and the economic outlook.”
In Asia, China’s consumer inflation fell far more than expected to fall below zero for the first time in 13 months as deflationary pressures persisted in the economy. Investors will now be looking for signs that the government’s stimulus is translating into stronger domestic demand.
