Asia Markets

Asian shares fall following Fed Chair Powell's testimony; China PMI misses forecast

Key Points
  • Asian markets declined after Federal Reserve Chairman Jerome Powell's Tuesday testimony.
  • Powell had indicated that the option of the Fed raising interest rates more than three times was open.
  • China's official manufacturing PMI came in at 50.3, below the 51.2 forecast by Reuters.

Asian markets closed lower on Wednesday after Chinese manufacturing data came in below expectations. Markets also digested comments from the new Federal Reserve chief made overnight.

Losses in Asia, which were initially slighter than declines seen stateside, steepened as the session progressed.

The declined 321.62 points, or 1.44 percent, to end at 22,068.24, paring some of its recent gains. The index slipped further into negative territory as the yen firmed during the session.

A miss in industrial output figures for January, which showed a steep fall of 6.6 percent on month, likely weighed on sentiment. That was below a median 4.2 percent decrease projected by Reuters.

Manufacturers, technology, automakers and financials traded in negative territory. Among large caps, Honda Motor fell 2.19 percent, SoftBank Group dropped 2.39 percent and Fast Retailing lost 2.52 percent.

South Korea's Kospi fell 1.17 percent to close at 2,427.36. Tech heavyweight Samsung Electronics, which traded in positive territory earlier in the day, closed lower by 0.68 percent as other tech stocks recorded declines.

Automakers and manufacturing names finished the session mostly lower.

Over in Australia, the S&P/ASX 200 finished the session 0.68 percent lower at 6,016, with just three out of its 12 sub-indexes closing in positive territory. Gold producers and telecommunications stocks were among the worst performing sectors while the heavily weighted financials sector slipped 0.55 percent.

Mining majors Rio Tinto and BHP closed lower by 0.55 percent and 1.96 percent, respectively.

Meanwhile, greater China markets extended losses after declining in the last session.

Hong Kong's fell 423.94 points, or 1.36 percent, to close at 30,844.72. Major financial stocks closed in negative territory, with heavyweights China Construction Bank and HSBC down 2.74 percent and 0.76 percent, respectively.

Tech giant Tencent, the most heavily weighted stock on the index, fell 3.09 percent by the end of the day, as other technology names similarly recorded declines.

Markets in mainland China were mixed: The lost 0.99 percent, but the Shenzhen composite pared early losses to close higher by 0.16 percent. Meanwhile, the ChiNext start-up board climbed 0.44 percent by the end of the day.

Of note, official manufacturing PMI in China for the month of February stood at 50.3, below the 51.2 forecast by Reuters and the 51.3 figure seen in January. China's February PMI reading may be influenced by long Lunar New Year public holidays this year, as factories shut over the festive season.

Even so, the data released on Wednesday still point to a "clear slowdown" in early 2018, said Julian Evans-Pritchard, Capital Economics' senior China economist in a note.

MSCI's broad index of shares in Asia Pacific excluding Japan was down 1.13 percent by 3:39 p.m. HK/SIN.

Markets in Taiwan were closed for Peace Memorial Day.

US stocks fall on Powell comments

Major U.S. stock indexes recorded declines of more than 1 percent across the board on Tuesday, with the Dow Jones industrial average falling 1.16 percent, or 299.24 points, to close at 25,410.03.

The moves came after Federal Reserve Chairman Jerome Powell's positive assessment of the economy during his testimony before Congress on Tuesday. Powell also indicated that the central bank raising interest rates more than three times was a possibility as inflation moves "up to target."

"The gist is that even as [Powell] espoused that the Fed will continue to normalize policy at a gradual pace, markets suspect his confidence could rub off to four rate hikes for 2018, instead of the three penciled in," Chang Wei Liang, a strategist at Mizuho Bank, said in a note.

U.S. Treasury yields rose on the back of those remarks, with the yield on the benchmark 10-year Treasury note standing at 2.9 percent during early Asian trade.

Following Powell's Tuesday testimony, the dollar index, which tracks the U.S. currency against a basket of rivals, was steady at 90.345 after bouncing in the last session.

Against the yen, the dollar pared overnight gains to trade at 107.06 at 3:34 p.m. HK/SIN, below Tuesday's close of 107.36. The move also came as Japan's central bank slightly reduced the amount of 25 to 40-year Japanese government bonds to 70 billion yen ($652 million) it offered to purchase, Reuters reported.

Meanwhile, the Australian dollar edged up after falling as low as $0.7780 in the last session with the firmer dollar. The Aussie dollar last traded at $0.7805.

In corporate news, South Korean steelmaker Posco fell 4.49 percent. The company said Tuesday that it would purchase a maximum of 240,000 tons of lithium concentrate each year from Australia's Pilbara Minerals, Reuters reported.

Meanwhile, shares of Australian retailer Harvey Norman plunged 12.45 percent after the company reported a 19.3 percent fall in first-half profit.

On the commodities front, oil prices extended losses after last session's declines. U.S. West Texas Intermediate crude futures slipped 0.38 percent to trade at $62.77 per barrel. Brent crude futures edged down by 0.23 percent to trade at $66.48.

Economic releases for the day included January retail sales out of Japan, which rose 1.6 percent on year, missing a 2.1 percent increase projected.

Ahead, the release of India's fourth-quarter GDP is expected later in the day at 8:00 p.m. HK/SIN.

— CNBC's Huileng Tan contributed to this report.