Asia-Pacific Shares Expected to Open Higher after Fed’s Powell Eases Fears of Policy Shift

If the price action in the U.S. is any indication, Asia-Pacific stock index traders should expect volatility and a bias to the upside on the opening. Late in the session on Tuesday, all three major U.S. stock index futures are trading high after recovering from early session weakness.

U.S. shares bounced off their lows after Federal Reserve Chair Jerome Powell said in his testimony to Congress that inflation is still “soft” and the economic outlook is still “highly uncertain,” easing fears of a policy change by the central bank.

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved, the Fed chief said in prepared remarks for the Senate Banking Committee.

Tuesday’s Asia-Pacific Recap

Shares in the Asia-Pacific region finished mixed on Tuesday, as investors monitored the sell-off in regional technology stocks after their counterparts tanked on Wall Street overnight.

In the cash market on Tuesday, Hong Kong’s Hang Seng Index settled at 30632.64, up 312.81 or +1.03% and South Korea’s KOSPI Index finished at 3070.09, down 9.66 or -0.31%. Japan was closed for a holiday.

In Australia, the S&P/ASX 200 Index settled at 6839.20 and China’s Shanghai Index closed at 3636.36, down 6.09 or -0.17%.

Hong Kong Stocks End Higher on Gains in Financials, Energy Firms

Hong Kong stocks closed higher on Tuesday, helped by gains in financial and energy firms on hopes of a faster economic recovery globally.

The Hang Seng Financials Index climbed 2.1% to lead the gains. The index is up 12.3% so far this year. The Hang Seng Energy Index advanced 2.6% as oil prices jumped.

Galaxy Entertainment Group surged as much as 12% to a record high of HK$78.20, the top mover among Macau’s gaming stocks that advanced on reports of a strong rebound in gaming revenue during the Chinese New Year.

Investors have started to wonder if some stocks were overvalued, leading to a correction in consumer and new economy stocks that had been favored by investors, Guodu Hong Kong noted in a report.

China Stocks End Lower, Losses Limited by Gains in Financials

China stocks closed lower in volatile trading on Tuesday, after a sharp correction the previous session, as worries over policy tightening weighed on sectors with lofty valuations, although losses were limited by gains in financial shares.

South Korean Shares End Lower Amid Rising Yields, Inflation Worries

South Korean shares closed lower on Tuesday, marking a negative finish for a fourth session in five, as the appeal of equities was dented amid higher bond yields and inflation outlook.

In other news, the Korean central bank chief said he will consider stepping up government bond purchases if an increase in issuance adds to volatility in yields, but stopped short of offering a concrete plan.