Asian Stocks to Gain After Powell Allays Concerns: Markets Wrap

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(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. 

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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%.

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“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.

Separately, China said it will impose retaliatory tariffs on imports of rapeseed oil, pork and seafood from Canada as the trade war escalated.

Even after the late rebound in the S&P 500 on Friday, the gauge wrapped up its worst week since September. The index has fallen almost 7% from an all-time high in February, giving up all gains since the presidential election. Big Tech stocks have borne the brunt of the selloff, with the Nasdaq 100 close to a technical correction.

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President Donald Trump deflected concerns about the risks of a US slowdown. The economy faces “a period of transition,” he said on Fox News’ Sunday Morning Futures. 

The moves have come with increased volatility, with the Cboe Volatility Index — which measures expectations for S&P 500 swings over the next month — rising above 26 intraday last week, a level rarely seen since the Covid era of 2020-2022.

“What I do know is that volatility seems like the only thing that is certain at the moment,” said Kenny Polcari at SlateStone Wealth. “Investors should make sure they understand that and are prepared for what that means. So, make sure you are well diversified for this ride.”

In commodities, West Texas Intermediate oil posted a seventh weekly decline, while gold rose for the week as traders sought haven from the market uncertainty.

Key events this week:

• Germany industrial production, Monday
• Japan current account, Monday
• Pakistan rate decision, Monday
• Australia consumer confidence, Tuesday
• Japan GDP, household spending, money stock, Tuesday
• US job openings, Tuesday
• Canada rate decision, Wednesday
• India industrial production, CPI, Wednesday
• Japan PPI, Wednesday
• Malaysia industrial production, Wednesday
• South Korea jobless rate, Wednesday
• US CPI, Wednesday
• Eurozone industrial production, Thursday
• US PPI, initial jobless claims, Thursday
• France CPI, Friday
• Germany CPI, Friday
• New Zealand food prices, BusinessNZ manufacturing PMI, Friday
• UK industrial production, Friday
• US University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• Hang Seng futures fell 0.4% as of 6:53 a.m. Tokyo time
• S&P/ASX 200 futures rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

Cryptocurrencies

• Bitcoin fell 1.4% to $81,898.87
• Ether fell 1.2% to $2,023.69

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.30%
• Australia’s 10-year yield advanced four basis points to 4.44%

Commodities

• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

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