Asian stocks close mixed as dollar extends gains after upbeat comments from Fed's Powell

  • Asian stocks closed mixed on Wednesday, with China markets losing steam and finishing lower.
  • Japan's Nikkei 225 rose, with exporters gaining on the weaker yen.
  • The dollar was broadly firmer after Fed Chairman Jerome Powell gave an upbeat assessment of the U.S. economy in his testimony before congress.

Asian shares closed mixed on Wednesday, after firmer gains seen earlier slightly faded — although investors were still assured by the upbeat remarks from Federal Reserve Chairman Jerome Powell during his congressional testimony.

In Tokyo, the Nikkei 225 rose 0.43 percent, or 96.83 points, to close at 22,794.19, recording its fourth consecutive session of gains. Exporters rose as the yen remained weak, with automakers tacking on 1.21 percent.

Also contributing to the morning's sharp gains were oil and coal sector shares. The Topix oil and coal products subindex jumped 2.17 percent, recovering after tanking earlier this week on the drop in oil prices.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Elsewhere, the S&P/ASX 200 added 0.67 percent to end at 6,245.10, with health care and materials the top-performing sectors. Mining major BHP popped, closing higher by 3.29 percent after reporting record full-year iron ore production.

Other major markets in the region finished in negative territory. Over in Seoul, the Kospi gave up early gains, closing lower by 0.34 percent at 2,290.11. Tech stocks recorded significant gains, with index heavyweight Samsung Electronics rising 1.53 percent, but were offset by losses in other major sectors, including automakers, steelmakers and construction.

Hong Kong's Hang Seng Index reversed gains to slip 0.26 percent by 3:00 p.m. HK/SIN, with energy and materials leading losses, with CNOOC falling 2.55 percent before the market close.

China stocks extended losses, with the Shanghai composite slipping 0.35 percent to 2,788.44, marking its fourth straight day of declines. The smaller Shenzhen composite slid 0.75 percent to end at 1,588.12. Those declines came as the Chinese currency touched its lowest levels around two weeks earlier.

MSCI's index of shares in Asia Pacific outside of Japan slipped 0.09 percent in afternoon trade.

Powell positive on US economy

Gains in Asia came after the Fed's Powell gave a positive assessment of the U.S. economy during his semi-annual congressional testimony on Tuesday, indicating that gradual interest rate increases were warranted.

Powell also touched on the matter of trade disputes between the U.S. and its trading partners, saying it was "difficult to predict" the implications of those on the economy.

"So the key take away is that trade policy has not yet affected the Fed’s intentions for further gradual hikes. The Fed remains data dependent and the inclusion of the phrase 'for now' provides the bank with some flexibility if it needs to alter the interest rate path ahead," Rodrigo Catril, senior FX strategist at National Australia Bank, wrote in a note.

The dollar extended overnight gains made following Powell's comments, with the dollar index, which tracks the greenback against a basket of currencies, mostly steady at 95.241. Against the yen, the dollar traded at 113.06 at 2:42 p.m. HK/SIN, after touching a six-month high earlier in the day.

"[W]e note that Powell merely repeated the base case, and presented no new information that may be construed as a broad USD driver going forward. Gains in the USD post-Powell may be due to the re-establishment of USD longs pared in the run-up to testimony," Terence Wu, a strategist at OCBC Bank, pointed out in a note.

U.S. stocks rose as earnings season rolled on stateside. The tech-heavy Nasdaq composite notched a record high on Tuesday before closing up 0.63 percent to 7,855.12 and outperforming other U.S. indexes. Netflix shares closed down by more than 5 percent after missing subscriber growth projections while shares of Amazon touched an all-time high on a report that reflected robust Prime Day sales.

Meanwhile, oil prices were slightly softer after U.S. crude inventories grew last week, rather than declined as expected, according to the American Petroleum Institute. U.S. crude futures declined 0.76 percent to trade at $67.56 per barrel and Brent crude futures edged down by 0.71 percent to $71.65.

In individual stocks, shares of Air China fell 3.12 percent in Shanghai. The decline came after the airline had its flight hours reduced by regulators after an emergency incident, linked to a co-pilot smoking while on board an airplane, occurred last week, Reuters said, citing local state broadcaster China Central Television.

Meanwhile, Xiaomi advanced 4.31 percent by 3:09 p.m. HK/SIN after the Hong Kong stock exchange said it had come to an agreement with mainland bourses to work on potentially allowing companies with weighted voting rights to be traded through the various connect programs.