Stocks Gain After Powell; Dollar Extends Advance

Most Asian stocks advanced after an upbeat assessment on the U.S. economy from Federal Reserve Chairman Jerome Powell comforted investors wary of a blowout in protectionism.

Japan outperformed, with the Topix index closing at a four-week high and equities also rose in Australia and the region’s emerging markets, though indexes pared earlier gains. Stocks in China and Hong Kong declined as U.S. futures came off the day’s highs. European futures were higher. The Nasdaq Composite Index hit a record high despite disappointing subscriber numbers from Netflix Inc. The dollar climbed against major peers as it held gains after Powell told a Senate committee that the Fed will continue to gradually raise interest rates “for now,” suggesting no iron-clad plan to keep tightening through next year.

Earnings and U.S. monetary policy have become the main drivers of market sentiment this week. That’s giving respite from a worsening in trade relations between the world’s biggest economic powers. Company results have been mixed thus far, with Deutsche Bank AG and Bank of America Corp. beating estimates, counterbalancing the Netflix reading.

Powell addressed Congress with the underpinnings of the U.S. expansion looking solid. Unemployment stands close to an 18-year low and inflation is around the Fed’s 2 percent target, though some sentiment indicators are starting to flash warning signs over escalating trade disputes. He will appear before the House Financial Services Committee Wednesday.

Elsewhere, oil declined after an industry group reported a surprise increase in U.S. crude inventories. Gold traded around the lowest in a year as its safe haven appeal was eroded by the strong outlook for the U.S. economy. Asian emerging-market currencies tumbled, led by the won and rupiah.

These are some key events coming up this week:

Earnings season continues, with reports due from companies including: Morgan Stanley, American Express, Microsoft, Taiwan Semiconductor Manufacturing, Unilever and IBM.

Euro-zone inflation data for June is expected on Wednesday to show the annual rate inched higher to 2 percent.

These are the main moves in markets:

Stocks

Japan’s Topix index rose 0.4 percent at the 3 p.m. close in Tokyo.

South Korea’s Kospi index fell 0.3 percent.

Hong Kong’s Hang Seng Index dropped 0.3 percent.

The Shanghai Composite Index lost 0.2 percent.

Futures on the S&P 500 Index were little changed. The S&P 500 rose 0.4 percent.

FTSE 100 futures rose 0.4 percent.

The MSCI Asia Pacific Index was flat.

Currencies

The Japanese yen fell 0.2 percent to 113.05 per dollar, trading around its weakest since January.

China’s yuan weakened 0.2 percent to $6.7381.

The euro fell 0.3 percent to $1.1631.

Bonds

The yield on 10-year Treasuries rose about one basis point to 2.87 percent.

Australia’s 10-year bond yield fell two basis points to 2.64 percent.

Commodities

West Texas Intermediate crude fell 0.7 percent to $67.62 a barrel.

Gold declined 0.3 percent to $1,224.22 an ounce.

Source: Bloomberg