Asian markets largely advanced on Thursday, with investor confidence rising as the US Federal Reserve chief offered an upbeat assessment of the economy despite concerns about a global trade war.
In his second day of congressional testimony on Wednesday, Federal Reserve Chairman Jerome Powell expressed optimism over the US economy but cautioned that the spiralling global trade row was having a negative impact on companies in the US, reports BSS.
“We hear from our extensive network of business contacts a rising chorus of concerns,” he said.
US President Donald Trump has imposed steep tariffs on products from China worth tens of billions of dollars, and has threatened to target hundreds of billions more, on top of import taxes on steel and aluminium that have angered allies like the EU.
“Powell was pretty straightforward on the risks from the trade policy uncertainty though he tried to stay out of the political debate,” said Greg McKenna, chief market strategist at AxiTrader.
The Fed chief said that US businesses were already being hurt by reciprocal tariffs on key products, pointing out: “The bottom line is a more protectionist economy is less competitive, less productive.”
However, he also said that if Trump’s trade policy resulted in lower tariffs, that would be good for the US economy. Despite the concerns, Powell’s overall positive assessment saw markets largely rally in response.
Hong Kong, Tokyo and Sydney gained 0.3 percent. Singapore rose one percent and Shanghai edged up 0.1 percent. But Manila lost 0.6 percent.
In a sign of worsening tensions, a senior economic adviser to Trump attacked Chinese President Xi Jinping for blocking an agreement to resolve the trade dispute.
“I think Xi is holding the game up,” said Larry Kudlow, director of the White House National Economic Council. “I don’t think President Xi has any intention of following through on the discussions we’ve made.”
Oil rose on the back of new data on gasoline inventories, which were lower than expected.
“The gasoline numbers were marginally optimistic enough to raise supply concerns”, said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.
However, with Trump working to lower gasoline prices, and Russia and Saudi Arabia offering support, “it’s challenging to see today’s gasoline numbers turning the bearish market’s tide”, Innes warned.