MORNING BIDDING: Markets Suffer Another Setback as Powell Dies Easing Hopes

Jamie McGeever reported

(Reuters) - Asian Market Outlook.

Asian investors hoping for some relief from soaring U.S. bond yields and a surging dollar exchange rate were disappointed by Fed chief Jerome Powell's speech on Tuesday, and will likely be on alert in Wednesday's trading.

"Rather than giving us greater confidence, the recent data clearly suggests that it may take longer than expected to realize that confidence," Powell said in Washington, a signal to the world that inflation will not fall back to the central bank's 2% target as quickly as expected, and that interest rates will therefore have to This is a signal to the world that inflation will not fall back to the central bank's 2% target as quickly as expected, so interest rates will have to stay higher for longer.

The "longer-term move higher" also seems to apply to the US dollar, treasury yields and financial conditions indices - a suboptimal group for Asian assets that are already feeling the heat.

On Tuesday, Chinese stocks fell 1%, Japanese stocks and Asian ex-Japanese stocks fell a cumulative 2%, and currencies across the Asian continent slid, a move exacerbated by the yen's exchange rate, which fell to 155.00 yen to the U.S. dollar.

Tokyo Noodle has yet to take any action against the yen, which could infuriate policymakers across Asia. Finance ministers and central bankers attending the spring meetings of the International Monetary Fund (IMF) and the World Bank are sure to mention the strength of the dollar in their discussions.

The International Monetary Fund (IMF) sharply raised its outlook for U.S. economic growth on Tuesday, saying that stronger-than-expected growth in China in the first quarter may have prompted it to raise its growth outlook.

In theory, these are all favorable developments for Asian markets. And the resistance of Wall Street to another surge in bond yields on Tuesday may still inject some optimism into Asian trading on Wednesday.

But the tension in the Middle East and the first-quarter earnings report of the United States is not satisfactory may weaken this optimism.

The MSCI Asia ex-Japan Index hit a two-month low, falling 4% in the past four days. is it time for a pause, or is the selling momentum building?

The same question can be asked about the Japanese yen, which is making new 34-year lows almost every day.

The latest Japanese trade data and the Reuters manufacturing and non-manufacturing business sentiment survey "tankan" will be released on Wednesday, but will probably not have much impact on the yen.

In terms of domestic factors that could affect the yen, in addition to direct intervention, investors will be watching inflation data later this week and comments made by Bank of Japan Governor Kazuo Ueda in Washington.

Perhaps the bright spot on the Asia-Pacific economic calendar on Wednesday was New Zealand's inflation rate.

A Reuters poll showed that the annual inflation rate for the first quarter is expected to slow to 4% from 4.7% in the last three months of last year.This would be the lowest level since the second quarter of 2021.

Here are some of the major developments that could provide more曏 for the market on Wednesday:

- International Monetary Fund/World Bank Meeting in Washington, DC

- Japan Trade (March)

- New Zealand inflation (first quarter)

(By Jamie McKeever)