Asian stocks tumble ahead of Powell’s speech

Most Asian stock markets fell Tuesday as optimism about China’s reopening has been dampened recently. while investors became cautious in anticipation of further guidance on U.S. monetary policy from Federal Reserve Chairman Jerome Powell.

The Shanghai-Shenzhen CSI 300 and Shanghai Composite fell 0.1 percent and 0.2 percent, respectively, while Hong Kong’s Hang Seng fell 0.2 percent from a six-month high. Investors were cautious about a short-term economic recovery in China as the country faces the worst outbreak in its history after further easing measures to curb Covid-19. Still, Chinese benchmark indices traded near multi-month highs.

Sentiment in Asian markets edged up slightly ahead of Powell’s speech, focusing on a change in the Fed chairman’s hawkish rhetoric, while recent economic data showed a decline in inflation expectations. Meanwhile, a look at U.S. consumer inflation data for December pointed to a further decline in price pressures.

Overnight comments from some Federal Reserve officials reinforced the perception that the central bank will keep interest rates higher for longer and also dampened regional sentiment. However, the Fed is expected to raise rates more slowly in the coming months, which should help Asian markets after the rate hike in 2022.