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Asian Stocks Up, Powell Hints at Interest Rate Hikes -Breaking

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© Reuters.

By Gina Lee

Investing.com – Asia Pacific stocks were mostly up on Wednesday morning while bonds fell after signaled an interest rate hike liftoff, vigilance on inflation, and economic resilience.

China’s was up 0.27% by 9:24 PM ET (2:24 AM GMT) while the fell 0.58%. The earlier information was released by the country in the morning.

Hong Kong’s gained 0.57%.

Japan’s rose 0.73%, with the country’s at 44.2 for February.

South Korea’s jumped 1.37% and in Australia, the rose 0.69%.

The safe-have demand sparked by Russia’s invasion of Ukraine on Feb. 24 has eased somewhat. While bonds in Australia and New Zealand declined, U.S. Treasuries recouped most of the sharp losses they suffered from Wednesday. The benchmark U.S. 10-year yield is still below the levels of 2% seen prior to the invasion.

In his testimony before Congress, Powell supported a quarter point Fed rate increase later in the month. He said that the central bank might take tougher measures if inflation continues to rise.

The Fed chair managed to “appease risk-markets by ruling out a 50 basis-points hike in March, while simultaneously promising inflation vigilance at following meetings,” Citigroup Inc. strategists William O’Donnell and Edward Acton said in a note.

While the Fed is among several central banks monitoring Ukraine’s conflict and its potential economic consequences, it also plans to raise interest rates. The Fed increased its interest rates to 0.5% Wednesday. Meanwhile, the European Central Bank will publish the rate later in the day.

St. Louis Fed President James Bullard called for a “rapid withdrawal of policy accommodation.” His colleague, Chicago Fed Bank President Charles Evans said monetary policy is currently “wrong-footed” and needs to be upwardly adjusted toward neutrality.

“It’s really time for investors to be prepared for more volatility, especially in the bond markets” as the Fed has yet to commence with balance-sheet reduction, Quadratic Capital Management LLC chief investment officer Nancy Davis told Bloomberg.

Russia’s isolation on the international market continues. MSCI Inc. has removed Russian shares from its emerging markets index. Russia will also be removed from all Russell equity indices. Fitch Ratings slashed the country’s credit rating by six levels to junk, saying that the severity of international sanctions could undermine Russia’s capability and willingness to service debt.

U.S. data and other data will be made available in the later part of the day. A day later, the U.S. latest jobs report including will be released.

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