Investing.com - Asian equities extended their losses in afternoon trade on Wednesday as comments from U.S. Federal Reserve Chair Jerome Powell spurred speculation that interest rates may rise faster than expected.
Powell said in his first public testimony that he expected the economy to be strong during the next two years and that his personal outlook for growth has firmed since the end of last year. Powell’s comments added to concerns that the Fed was rethinking its plan to add a fourth rate hike this year, instead of three, to contain inflation.
The Dow closed 1.2% lower and the S&P 500 Index dropped 1.3% on Tuesday, while 10-year Treasury yields climbed back up to 2.90% and the dollar stood at almost a three-week high against a basket of currencies after Powell’s upbeat view.
Japan’s Nikkei 225 slipped further into negative territory and closed 1.4% lower. The Bank of Japan was partly in focus as it cut its 25-year Japanese government bonds (JGB) buys to 70 billion yen, compared to 80 billion yen in its last market operation.
The economic calendar was also in focus as Japan’s January industrial production fell 6.6% MoM compared to the 4.2% decrease forecasts. Retail sales for the month also missed estimates, down a seasonally adjusted 1.8% MoM versus forecasts for a decline of 0.6%.
Mainland Chinese markets were mixed, with the Shanghai Composite retreated 0.8% while SZSE Component gained 0.53% by 1:30am ET. The country’s February manufacturing PMI expanded less than expected and came in at 50.3, compared to the estimate of 51.1. Non-manufacturing PMI stood at 54.4, also below the forecasted 55.0. Reports suggested that the long Lunar New Year break in mid-February may be to blame for the slowdown and expected output to improve in the coming months.
Hong Kong’s Hang Seng Index also traded 1.7% lower. Auto maker Geely Automobile Holdings Ltd (HK:0175) made headlines as German Chancellor Angela Merkel said there was no sign of violations in the acquisition of Daimler’s stake. The company’s shares outperformed the market and jumped 3.0% Wednesday.
The U.S. duties on Chinese aluminium foil gathered some attention as China expressed “strong dissatisfaction” with the decision.
"The U.S. has disregarded the WTO rules and seriously damaged the interests of China's aluminium foil exporters. China is strongly dissatisfied with this," Wang Hejun, the head of country’s Ministry of Commerce (MOFCOM)'s Trade Remedy and Investigation Bureau, said in a statement.
Elsewhere, Australia’s S&P/ASX 200 closed 0.7% lower, as losses in telecom services and gold sectors led shares lower. The Aussie dollar traded lower with the weak China PMI data being cited as a catalyst for the selling.