Asia stocks mixed; Japan’s first quarter GDP data released

SINGAPORE — Stocks in Asia Pacific were mixed on Wednesday morning following comments from U.S. Federal Reserve Chairman Jerome Powell, who said he was committed to raising rates until inflation subsides.

The Nikkei 225 in Japan rose 0.7% while the Topix index traded up 0.67%.

Japan’s economy shrank 1% on an annualized basis in January-March from the previous quarter, government data showed Wednesday. That was less than the 1.8% contraction predicted in one poll, according to Reuters.

The markets had a great run last night and a lot of that was down to the fact that.. year to date we have about six straight weeks of weekly losses we have the biggest tech underweight since 2006 and we have the largest equity underweight since May 2020.

Kelvin Tay

Regional Investment Director, UBS Global Wealth Management

Elsewhere, mainland Chinese stocks fell, with the Shanghai Composite down 0.15% while the Shenzhen Component edged lower. The Hang Seng index in Hong Kong also fell 0.42%.

The South Korean Kospi rose 0.1%. Australian stocks also posted gains as the S&P/ASX 200 climbed 0.8%.

MSCI’s broadest index of Asia-Pacific stocks outside Japan traded up 0.33%.

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US Fed Chairman Jerome Powell said he would support interest rate hikes until prices start to fall back to a healthy level. Earlier in May, the US central bank raised rates by half a percentage point – its biggest hike in two decades – as it seeks to tackle inflation.

Overnight on Wall Street, the S&P 500 jumped 2.02% to 4,088.85 while the tech-heavy Nasdaq Composite jumped 2.76% to 11,984.52. The Dow Jones Industrial Average gained 431.17 points, or 1.34%, to 32,654.59.

“The markets had a great run last night and a lot of that was because…year to date we’ve had about six straight weeks of weekly losses, we’ve got the biggest under- technology weighting since 2006 and we have the largest equity underweight since May 2020,” Kelvin Tay, regional chief investment officer at UBS Global Wealth Management, told CNBC’s “Squawk Box Asia” on Wednesday.

“The market is actually on the verge of a rally, but the big question is, is this a bearish rally or is this a sustainable rally?” Tay said. “I think it’s going to be difficult for the rally to keep its legs up given that, you know, you also have quantitative easing in the next couple of weeks.”

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.285 after falling recently from levels above 104.

The Japanese yen was trading at 129.11 to the dollar, after holding above the 129 level against the greenback for much of the week so far. The Aussie dollar changed hands at $0.7012, still above the sub-$0.70 levels seen earlier in the week.

Oil prices were higher in morning trading hours in Asia, with international benchmark Brent futures up 0.6% at $112.60 a barrel. U.S. crude futures climbed 1.01% to $113.54 a barrel.

Correction: This article has been updated to accurately reflect movements in the Asia-Pacific market on Wednesday, an earlier version misstated the day in one instance.

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