SYDNEY- Stocks and commodities rose in relief and the dollar hit a six-week low on Wednesday, after Federal Reserve Chair Jerome Powell sounded less hawkish than expected in testimony to Congress, as he charts a path out of pandemic policy settings.
Bonds have also steadied after beginning the year with a rout, though a new test looms later in the day when US inflation data is expected to come in red hot.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1 percent to a one-month high, led by a 3.5 percent jump for tech stocks in Hong KongJapan’s Nikkei rose 1.9 percent.
Powell told a congressional hearing on his confirmation for a second term at the helm of the central bank that the economy could handle the COVID-19 surge and tighter monetary policy.
But he did not go into any new details beyond what traders already gleaned from the minutes of last months’ Fed meeting and that turned out to be enough to staunch selling in the Treasury market and US tech stocks.
“One of our main takeaways … was that the sense of urgency on tightening has not obviously heightened compared to the last time we heard from Powell in December,” analysts at NatWest markets said in a note.
The Nasdaq and S&P 500 recorded their best sessions of 2022, rising 1.4 percent and 0.9 percent, respectively. S&P 500 futures were steady in early Asia trade.
In the bond market, benchmark 10-year Treasury yields were steady at 1.7374 percent and have pulled back about 7 basis points (bps) from an almost two-year high hit on Monday.
Commodities also caught a boost and Brent crude futures leapt 3.5 percent overnight and inched above $84 per barrel for the first time in two months on Wednesday. US crude rose 3.8 percent overnight and was last up 0.3 percent to $81.45 a barrel.
