Asia report: Markets mixed in subdued trading after Powell comments

Markets in Asia were mixed in subdued trading on Wednesday, as investors digested the latest rhetoric from the US Federal Reserve chair, suggesting the central bank was taking a more hands-off approach to the prospect of interest rate cuts.

In Japan, the Nikkei 225 was down 0.51% at 21,086.59, as the yen weakened 0.47% against the dollar to last trade at JPY 107.70.

Of the major components on the Tokyo benchmark, automation specialist Fanuc was down 0.08%, fashion firm Fast Retailing fell 1.04%, and technology conglomerate SoftBank Group was 1.41% weaker.

The broader Topix index lost 0.59% to end its trading day at 1,534.34.

On the mainland, the Shanghai Composite was 0.19% lower at 2,976.28, and the smaller, technology-heavy Shenzhen Composite was flat, closing at 1,560.51.

South Korea’s Kospi eked out gains of just 0.01% to settle at 2,121.85, while the Hang Seng Index in Hong Kong managed to add 0.13% to close at 28,221.98.

Both of the blue-chip technology stocks were in the green in Seoul, with Samsung Electronics up 0.22%, and chipmaker SK Hynix rising 3.3%.

Sentiment was weaker at the start of the Asian day, after a session of losses on Wall Street overnight which saw the Dow Jones Industrial Average posted its biggest one-day loss since the end of May.

Those movements stateside came after Federal Reserve chair Jerome Powell said the central bank was still working out whether uncertainties facing the economy were justifications for lower interest rates.

Powell said the Fed was taking the wait-and-see option, given how quickly things have been changing economically in the current geopolitical climate.

“At his speech in New York on Tuesday, Fed Governor Jerome Powell reiterated that the downside risks increased due to a greater uncertainty on the trade front with China and the incoming data further raised concerns about the health of the global economy,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“Although Powell’s dovish stance strengthened the case for two-to-three rate cuts within the next 12 months, all industries gave back gains in New York, including energy and mining stocks.”

Investors were also holding their breath ahead of the G20 summit in Japan, where US president Donald Trump was set to meet with his China counterpart Xi Jinping in a bid to hash out the countries’ trade differences.

Oil prices were higher as the region went to bed, with Brent crude last up 1.28% at $65.89 per barrel, and West Texas Intermediate rising 1.85% to $58.92.

In Australia, the S&P/ASX 200 was 0.26% weaker at 6,640.50, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was down 0.1% at 10,408.05.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.33% at AUD 1.4319, and the Kiwi advancing 0.65% to NZD 1.4964.