Asia report: Stocks mixed ahead of Powell testimony, RBA signals pause

Most Asian stock markets ended the day in positive territory on Tuesday, with investors keeping an eye on the upcoming testimony of US Federal Reserve Chair Jerome Powell to Congress.

Japan's Nikkei 225 gained 0.25% to close at 28,309.16, while the Topix index added 0.42% to end at 2,044.98.

Some of the top performers on the Nikkei included Kobe Steel, which gained 5.81%, Teijin, which rose 3.52%, and Inpex Corporation, which added 3.01%.

In China, the Shanghai Composite fell 1.11% to close at 3,285.10, while the Shenzhen Component dropped 1.98% to finish at 11,608.58.

Decliners in Shanghai included Aerosun Corporation, which lost 7.1%, and Guizhou Sanli Pharmaceutical, which dropped 7.05%.

Hong Kong's Hang Seng Index slipped 0.33% to close at 20,534.48, with Chow Tai Fook Jewellery Group declining 6.03%, China Unicom Hong Kong falling 5.49%, and Country Garden Holdings down 3.94%.

South Korea's Kospi index ended the day almost flat, up 0.03% at 2,463.35.

Top performers included KG Chemical Corporation, which surged 29.82%, and Kum Yang, which rose 17.35%.

In Australia, the S&P/ASX 200 gained 0.49% to close at 7,364.70, with Contact Energy rising 4.84% and Sayona Mining adding 4.26%.

Meanwhile, New Zealand's S&P/NZX 50 edged up 0.06% to end at 11,919.56, with Pushpay Holdings rising 6.96% and Vista Group up 2.11%.

On the currency front, the yen weakened 0.02% against the dollar to last trade at JPY 135.96, while the Aussie retreated 0.85% to AUD 1.4986.

The Kiwi, meanwhile, edged up 0.11% on the greenback to last change hands at NZD 1.6120.

In oil markets, Brent crude futures slipped 0.2% on ICE to $86.01 per barrel, while the NYMEX quote for West Texas Intermediate fell 0.14% to $80.33.

“Asian markets opened on the front foot following a relatively flat close on Wall Street as markets digested Friday’s gains,” said Patrick Munnelly at TickMill Group, adding that investors stateside were reluctant to extend risk exposure ahead of a “heavy backended data slate” this week.

“China data once again put a lid on risk appetite, as Chinese trade data confirmed further contraction on dollar-denominated imports and exports, leading to mixed performance on the Hang Seng and Shanghai Composite,” Munnelly added.

“The standout performer was the ASX 200 as the Reserve Bank of Australia hiked rates again, but the move was accompanied by a less hawkish statement which buoyed investor sentiment, as once again markets sense that a pause may be closer than expectations post the previous raise and statement.”

On the economic agenda, the Reserve Bank of Australia has increased its cash rate to 3.6%, in line with expectations.

In a release, the central bank said global inflation remained very high, and that services price inflation remained elevated in a number of economies.

“Today's statement read dovish - a far cry from last month's hawkish forward guidance that suggested a string of successive rate hikes,” said analysts at TD Securities.

“The softening in forward guidance opens up the potential for the RBA to pause at next month's meeting.”

TD said the dovishness would now give the Bank more flexibility and optionality to respond to data outcomes.

“Driving the dovish reassessment appears to be soft wages prints, lowering the risk of a prices-wage spiral as well as the Bank's strong conviction that inflation has peaked in Australia.”

Elsewhere down under, Australia saw its trade surplus narrow to AUD 11.7bn in January, a decline from the previous month.

While exports rose 1%, it was still an increase from the prior month's decline of 1%, while goods and services imports grew 5% after a 1% growth in December.

In China, exports fell 6.8% in February, less than what economists surveyed by Reuters had predicted at 9.4%.

It was also less than the previous month's fall of 9.9%.

Imports also fell 10.2%, down more than expected to see a drop of 5.5% on an annualised basis and a further decline from the previous month's contraction of 7.5%.

The economy's trade surplus in dollar terms came in at $116.88bn for the month - higher than anticipated, and an increase from January’s surplus of $78bn.

“China’s exports are likely to continue to decline, albeit at a more moderate pace, in the first half,” said Duncan Wrigley at Pantheon Macroeconomics.

“Korean exports point to sustained weak global demand, though indications of a softening downturn in certain key markets.”

Wrigley added that China’s imports would meanwhile likely stage a “moderate” pick-up, as the economy reopened.

“The Government Work Report set a restrained ‘about 5%’ growth target for 2023, and an accordingly modest support package for domestic demand, which should feed into noticeable, but not explosive, growth in imports.”

Reporting by Josh White for Sharecast.com.