By Gina Lee
Investing.com – Asia Pacific stocks were down Wednesday morning, even as Treasury yields steadied and the U.S. Federal Reserve pledged continued support for the U.S. economic recovery from COVID-19.
Japan’s fell 0.93% by 10:29 PM ET (3:29 AM GMT) as markets re-opened after a holiday.
South Korea’s was down 0.35% and in Australia, the fell 1.05%.
Hong Kong’s slumped 2.36%. The city’s financial secretary Paul Chan will hand down the budget later in the day.
China’s slid 1.55% and the fell 0.82%.
Fed Chairman Jerome Powell said during his testimony before the Senate Banking Committee on Tuesday that the economy remained “a long way” from employment and inflation goals and that rates would stay low and bond buying proceed apace until there was “substantial further progress”.
“The overall takeaway from Powell is that over the next couple of months he will just keep singing the same dovish commitment song … until we see more than half of the 10 million jobs come back, Powell won’t change his tune,” OANDA senior market analyst Edward Moya told Reuters.
Powell added that higher bond yields reflect raised economic optimism rather than inflation fears and was also cautiously expectant that the U.S. could return to more-normal activity later in 2021. The comments helped encourage a return of the buy-the-dip mentality that has limited equity drawdowns in recent months, as investors bet on a global economic recover from COVID-19 thanks to vaccine rollouts and U.S. stimulus measures.
“Investors need not doubt that what we are experiencing is a classic cyclical upswing: economic growth contracted last year, the cause of that contraction is now being resolved, and that allows growth, and earnings, to expand, supporting risk assets,” New York Life Investments portfolio strategist Lauren Goodwin said in a note.
Ten-year Treasury yields held steady just below their one-year high reached on Monday.
Despite Powell’s reassurance, some investors pulled their rate-hike expectations forward since the start of 2021 and predicted that the Fed would raise interest rates by a quarter point by mid-2023.
In other central bank news, the Reserve Bank of New Zealand (RBNZ) kept its unchanged at 0.25% earlier in the day, in line with expectations. RBNZ also made no changes to its bond purchase program, adding that policy will need to remain stimulatory until inflation is sustained at 2% and employment hits maximum levels.
staged a comeback towards the $50,000 mark as the recent round of volatility highlighted questions about the durability of the cryptocurrency’s recent rally.
Investors are also looking to the meeting of Group of 20, or G20, finance ministers and central bankers, including U.S. Treasury Secretary Janet Yellen, due to take place virtually on Friday.
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