Asian shares jump in on Fed’s dovish chair!

After U.S. Federal Reserve Chairman Jerome Powell struck a more dovish tone than some investors expected in a long-awaited speech on Friday, Asian shares started the week with gains and the dollar was not far off two-week lows.

Meanwhile, oil prices increased after energy companies halted output as Hurricane Ida blasted into the United States’ southern shore.

Soon after the bell, Japan’s Nikkei (.N225) jumped 0.9 %, and MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) up 0.32 % in early trading before Chinese markets opened.

Australia (.AXJO) increased by 0.39 %, while Korea’s Kopsi (.KS11) increased by 0.54 %.

The S&P 500 e-minis, or U.S. stock futures, were little affected, up 0.04 %.

Investors were anxious to see if Powell, who was speaking at a symposium in Jackson Hole, Wyoming, would offer a clear indication of his thoughts on when the central bank will begin to reduce asset purchases or hike interest rates to begin unwinding monetary stimulus.

However, he gave no indication in his prepared remarks that he would stop asset purchases other than to indicate it could happen “this year,” causing the S&P 500 (.SPX) and the Nasdaq (.IXIC) to close last week at new all-time highs.

The yield on benchmark 10-year Treasury notes was 1.3054 percent, down from 1.312 percent at the end in the United States, while the dollar index, which measures the greenback against a basket of currencies, was at two-week lows.

Investors in China, on the other hand, are waiting for data this week to see if it indicates that policymakers are more inclined to increase easing measures.

Purchasing manager surveys for manufacturing and services are due this week, with traders waiting to see if a trend toward slower growth will continue, a shift exacerbated by recent localized movement restrictions imposed in response to an increase in cases of the Delta variant of the new coronavirus.

“We expect both the manufacturing and services PMIs to moderate in August, given the widespread Delta variant and strict lockdown,” said Barclays analysts in a note.

“With slowing growth momentum and dovish signals from the (People’s Bank of China) meeting this week, we expect more easing, but still at a measured pace”

Oil was also in focus after energy firms suspended 1.74 million barrels per day of oil production in the U.S. Gulf of Mexico as Hurricane Ida slammed into the Louisiana coast as a Category 4 storm. 

U.S. crude rose 0.86% to $69.34 a barrel. Brent crude rose 1.25% to $73.38 per barrel.

Gold was slightly higher, with the spot price gold was traded at $1,817.7863 per ounce, up 0.07%.

Source: Reuters