Asia report: Markets finish mixed after encouraging words from Powell

Markets in Asia started their sessions slightly firmer on Wednesday, but finished up a mixed bag as investors digested reassuring words from Federal Reserve chair Jerome Powell at his Congressional testimony.

In Japan, the Nikkei 225 was ahead 0.43% at 22,793.19, as the yen strengthened 0.11% against the dollar to last trade at JPY 112.76.

A weaker yen earlier gave the major exporters a boost, with the carmaking sector ending the day up 1.21% in Tokyo.

The oil and coal subindex on the Topix was also a winner, adding 2.17% as energy shares staged a recovery, having tanked on weaker oil prices earlier in the week.

On the mainland, the Shanghai Composite was down 0.35% to 2,788.44, and the smaller, technology-heavy Shenzhen Composite slid 0.75% to 1,588.12.

Flag carrier Air China slid 3.12% in Shanghai, after the airline had its permitted flying hours cut following an emergency incident involving a pilot vaping in the cockpit while an aircraft was flying.

South Korea’s Kospi was off 0.34% at 2,290.11, while the Hang Seng Index in Hong Kong slipped 0.23% to 28,117.42.

The blue-chip technology stocks were ahead in Seoul, with Samsung Electronics rising 1.53%, but those gains were offset by a decline for carmakers, construction plays, and steel producers.

Nascent mobile phone maker Xiaomi rose 3.11% in Hong Kong, after the firm announced it had reached agreement with the mainland China stock exchanges to work towards allowing firms with weighted voting rights to be traded through the stock connect regimes.

Gains were seen across the board in Asia earlier in the day, after Powell gave the American economy a positive review in front of congress members at his semi-annual testimony overnight.

He did infer that gradual rises in the Fed’s interest rate targets would be warranted.

Powell also spoke to the ongoing issue of trade tension between the US and its trading partners - most prominently China - telling politicians that it was “difficult to predict” what kind of effect the ongoing disputes would have on the US economy.

“The key takeaway is that trade policy has not yet affected the Fed’s intentions for further gradual hikes,” noted National Australia Bank senior foreign exchange strategist Rodrigo Catril.

“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.”

Oil prices were lower, with Brent crude last down 0.75% at $71.62 per barrel, and West Texas Intermediate off 0.73% to $67.59.

In Australia, the S&P/ASX 200 managed gains of 0.67% to 6,245.10, led higher by the healthcare and mining subindices.

Major miner BHP was up 3.29% in Sydney trading, after it posted record iron ore production for the full year.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.4% at 8,964.10, led lower by fuel refiner and retailer Z Energy, which was off 2.7%.

The company, which is the largest retailer of fuel in New Zealand, slashed its full-year earnings guidance to NZD 30m after an extended closedown at the Marsden Point refinery in which it owns a share, and an increase in crude prices in the June quarter.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.4% at AUD 1.3588, and the Kiwi retreating 0.16% to NZD 1.4765.