Asia Stocks Set for Small Gains; Currencies Steady: Markets Wrap

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Asian stocks look poised to follow US equities with modest gains Monday after Jerome Powell said the Federal Reserve would “proceed carefully” on whether to raise interest rates again, while signaling policy will remain tighter for longer.

Most major currencies were little changed in early Asian trading, with the yen steadying after sliding to its weakest this year on Friday after the Fed chief’s remarks. Bank of Japan Governor Kazuo Ueda didn’t comment on foreign-exchange rates but said price growth remains slower than the central bank’s goal.

Equity futures for Japan, Hong Kong and Australia all pointed to small gains of less than 1% following the S&P 500’s 0.7% advance Friday, when it capped its best week since July. US equity futures opened higher Monday. While Treasuries were little changed during Powell’s long-awaited speech in Jackson Hole, Wyoming, yields pushed up after it concluded as the longer-for-higher rates message appeared to sink in. The yield on two-year bonds, which are highly sensitive to the Fed’s policy shifts, are comfortably above 5% while the rate on 10-year Treasuries fluctuated near 4.2%.

“Powell, as has been the case for some time, didn’t offer markets anything revelatory,” said Tom Garretson, senior portfolio strategist at RBC Wealth Management. “The market reaction looks consistent with the idea that the Fed is likely done raising rates over the near term, but still stands more than ready to do more if economic data dictates it.”

 

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