Asia report: Most markets fall after Powell's hawkish caution

Japan's Nikkei 225 rose by 0.48% to 28,444.19, while the Topix was up 0.3% to 2,051.21.

The gainers on the Japanese benchmark included Takashimaya, up 4.46%, Isetan Mitsukoshi Holdings, gaining 4.36%, and J.Front Retailing, rising 4.32%.

Meanwhile, China's Shanghai Composite and Shenzhen Component both fell slightly, by 0.06% and 0.09%, respectively, to 3,288.25 and 11,598.29.

Among the decliners in Shanghai were Fujian Tianma Science and Guangdong Wencan, which lost a respective 3.16% and 3.05%.

In Hong Kong, the Hang Seng Index was down by 2.35% to 20,051.25, with Country Garden Services losing 7.17%, CSPC Pharma off 6.23%, and Country Garden Holdings 5.33% weaker.

South Korea's Kospi fell by 1.28% to 2,431.91, with Hybe and SKC both experiencing losses, of 5.99% and 5.48%, respectively.

In Australia, the S&P/ASX 200 dropped 0.77% to 7,307.80, with Woodside Energy down 7.23% and Contact Energy 5.29% lower.

Finally, New Zealand's S&P/NZX 50 was down 0.54% at 11,855.54, with Goodman Property and Ryman Healthcare both experiencing losses of 3.04% and 2.68%, respectively.

In terms of currencies, the yen weakened 0.27% against the dollar to last trade at JPY 137.53, while the Aussie was 0.32% stronger at AUD 1.5140, and the Kiwi advanced 0.13% to NZD 1.6352.

On the oil markets, Brent crude futures were last 0.18% higher on ICE at $83.44 per barrel, while the NYMEX quote for West Texas Intermediate fell 0.06% to $77.53.

“Asian markets followed Wall Street lower on a Fed chair-fuelled sell-off in global equities, with the benchmark S&P 500 seeing its biggest losses in two weeks by shedding over 1.5% on the day,” said Patrick Munnelly at TickMill Group.

“The two-year-10-year US Treasury yield inversion marked its highest levels since the 1980s, leading investors to flee risk exposure for the safety of government debt as the two-year yield topped 5% overnight, with markets now pricing a 50-basis point March rate hike.

“The greenback soared to a three-month high on a renewed safe haven bid; at the same time gold was clattered, printing a $40 drop on the day.”

Sentiment was indeed tempered by Fed chair Powell's testimony in Congress on Tuesday, which were seen as more hawkish than anticipated.

In prepared remarks, Powell said "the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated."

Markets took that as a sign the Fed could continue to raise interest rates for longer than previously thought, despite calls from some to halt hikes soon.

Powell also noted that if data showed faster tightening was necessary, the Fed would be prepared to increase the pace of rate hikes.

In Japan, government data released on Wednesday showed that the country's seasonally-adjusted current account balance rose to JPY 216.3bn in January.

That was a significant drop from December's balance of JPY 1.18trn, however, and November's balance of JPY 1.92trn.

Meanwhile, Reserve Bank of Australia governor Philip Lowe said in a speech that the central bank was nearing a point where further interest rate hikes could be put on hold.

"With monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy," he said, according to a transcript.

Lowe noted that the timing of any pause would depend on both data and the bank's outlook.

Reporting by Josh White for Sharecast.com.