Asian stocks rise, currencies mixed after Powell’s cautious testimony

BENGALURU (July 10): Most Asian stock markets rose on Wednesday while regional currencies were mixed, as investors digested comments from US Federal Reserve chair Jerome Powell, who provided no fresh clues on the timing of a highly expected rate cut.

Powell said during the first day of his two-day congressional testimony that more good data would strengthen the case for rate cuts, adding that he was not sending a signal on the timing, boosting the dollar.

The South Korean won and the Taiwanese dollar were down 0.1% and 0.2%, respectively.

The Philippine peso was 0.3% higher, while the Thai baht inched up 0.1%.

Meanwhile, data from China showed that consumer price inflation came in below expectations, while producer price deflation persisted, pointing to stubbornly weak demand. The Chinese yuan was largely flat.

Recent inflation prints in other Asian economies, including the Philippines and Thailand, showed an easing trend, giving some leeway to central banks to think of cutting rates.

Philippine central bank governor said last week that Bangko Sentral ng Pilipinas has more scope to cut interest rates at its next meeting in August, after annual inflation slowed in June.

Rate decisions from South Korea and Malaysia are due on Thursday. Both the Bank of Korea (BOK) and the Bank Negara Malaysia are expected to keep their key policy rates on hold, according to Reuters polls.

“The BOK has had a tendency to hold (rates) for an extended period before pivoting to a cut and this should provide the won with some support,” analysts at Maybank wrote.

Stocks in the region were broadly higher, while global markets await a US consumer price report on Thursday to potentially get more clues on the Fed’s rate outlook.

Shares in Indonesia were 0.4% higher, at their highest since May 20, while Singapore stocks rose 0.8% to their highest level since late March 2022.

Singapore shares have gained 3.6% so far in July and are hovering near their record high, after touching it last week.

“Regional (Singapore) investors chasing yields were likely buying up Singapore’s banks and lifting the index. Even though shares in the city-state’s three big banks — DBS, UOB and OCBC — trade around record highs, dividend yields are more than 5%,” said Paul Chew, head of research at Phillip Securities Research in Singapore.

Elsewhere, Thai stocks rose 0.2%, while Taiwan shares added 0.5%, set for a sixth straight session of gains.

Stocks in South Korea were largely unchanged, while Philippine shares fell 0.9%, bucking the trend.

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