Most Asian markets up in wake of dovish Yellen remarks, but Nikkei lags 

Most Asian markets advanced after remarks from Federal Reserve chair Janet Yellen assuaged concerns about a near-term interest rate hike, but Japan’s shares retreated as the yen strengthened.

“Janet Yellen doubled down on dovishness, in a speech full of risks to the economic outlook,” Mark Matthews, head of research at private bank Julius Baer, said in a note Wednesday. “She totally contradicted the four Fed presidents who spoke last week, and any chance of the April rate hike suggested by them is over.”

Overnight, speaking to the Economic Club of New York, Yellen noted in prepared remarks that it is appropriate for policymakers to proceed “cautiously.” She noted recent readings on the strength of the U.S. economy since the beginning of the year have been mixed. On the policy front, she said research suggests that, with a funds rate at zero and increased uncertainty, the best policy is greater gradualism. Still, the Fed can hike if the economy grows faster, she said.

Japan’s Nikkei 225 was off 0.5 percent. Across the Korean Strait, theKospi was up 0.28 percent. Hong Kong’s Hang Seng index was higher by 1.37 percent.

Chinese markets were higher, with the Shanghai composite adding 1.44 percent and the Shenzhen composite up 1.4 percent.

Australia’s ASX 200 was off earlier highs, retracing gains of more than 1 percent to trade nearly flat.

In the wake of Yellen’s comments, the dollar index, which measures the strength of the dollar against a basket of currencies, retreated to the 95 handle, trading at 95.145 as of 11:45 a.m. HK/SIN, compared with levels above 96 before the remarks.

The weaker dollar helped spur the Japanese yen higher, with thedollar/yen pair trading at 112.47, compared with levels above 113 earlier in the week.

Major exporters were mixed, with Toyota off 1.66 percent, Nissan off 2.27 percent and Honda up 0.19 percent. A stronger yen is a negative for exporters as it lowers the value of their repatriated profits and makes their products less competitive overseas.

Sharp climbed 6.92 percent after Japan’s Yomiuri newspaper reported that Foxconn, which will be acquiring the Japanese company, would be overhauling management, including replacing the CEO, Reuters reported.

Before market open, Reuters reported Japan’s industrial output data showed fragile factory activity due to sluggish demand both at home and abroad. Industrial output fell 6.2 percent on-month in February, compared with a expectations from a Reuters poll for a 6 percent decline, following a 3.7 percent gain in January.

Shares of Japan’s Sun Corporation were up 8.48 percent. Last week, reports said one of Sun Corp.’s subsidiaries, Israeli firm Cellebrite is helping the U.S. Federal Bureau of Investigation (FBI) unlock an iPhone used by one of the San Bernardino shooters. On Monday, the Justice Department said it has accessed data on the phone, but the FBI said in a statement it could not comment on how the phone was unlocked or the identity of the third party behind it.

Down Under, banking stocks were mixed, after the country’s so-called Big Four banks sold off sharply on Tuesday on concerns over potential bad debt from their exposure to the resources and energy sectors.

Shares of ANZ reversed course and were down 0.65 percent,Commonwealth Bank of Australia and NAB were nearly flat whileWestpac was down 0.1 percent.

Elsewhere, Virgin Australia shares tumbled 8.97 percent after Reuters reported the airline’s largest stakeholder, Air New Zealand, is considering selling its 25.9 percent stake. Air NZ shares added 0.35 percent.

The Australian dollar also strengthened after Yellen’s remarks, fetching $0.7623, compared with levels around $0.7530 on Tuesday prior to the speech.

The Chinese yuan also strengthened against the dollar, with thedollar/yuan pair trading down 0.33 percent at 6.4850. Before the market open, the People’s Bank of China set the yuan mid-point fix at 6.4841, compared with the previous close of 6.5065.

Oil prices were higher in Asian hours, with U.S. crude futures up 0.73 percent at $38.56, after settling down $1.11 overnight. Global benchmark Brent was also up 0.46 percent at $39.32 a barrel, after settling down $1.13 in U.S. hours.

Reuters reported that the decision by Kuwait and Saudi Arabia to resume oil production at the jointly operated 300,000-barrel-per-day Khafji field, at a time when production is supposed to be frozen, triggered the selloff in oil overnight.

Energy plays were mixed around the region, with shares of Woodside Petroleum off 1.28 percent, Japan’s Inpex down 2.2 percent and Fuji Oiloff by 0.43 percent. Mainland Chinese energy plays were mostly higher, with Sinopec adding 7.76 percent and China Petroleum up by 4.41 percent.

U.S. equities closed up overnight, with the Dow Jones industrial average higher by 0.56 percent, the S&P 500 up by 0.88 percent and the Nasdaq composite adding 1.67 percent.

Source: CNBC

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