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Asian shares perked up and the dollar fell to two-week lows on Monday after U.S. Federal Reserve Chairman Jerome Powell struck a dovish tone at the central bank’s long-awaited symposium, although investors remained cautious about prospects in China.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.65% to a two-week high, and Japan’s Nikkei rose 0.46%.
Hong Kong rose 0.32%, Australia 0.2% and Korea 0.25% but Chinese blue chips bucked the trend, falling 0.26%.
“(Powell) really soothed the market’s concerns for now, as the Fed is extremely good at doing, and money is going back to the U.S., not that it ever really left,” said Daniel Lam, senior cross-asset strategist, at Standard Chartered (OTC:SCBFF) Wealth Management.
Lam said there were fewer uncertainties in the United States than in Asia and specifically China, though he added that any further rotation away from Asia would be more incremental “and less dramatic than we saw in July and early August because a lot of people have already left.”
Oil prices pared early gains on Monday, falling back from more than three-week highs reached earlier in the session, as a powerful hurricane slammed into the U.S. Gulf coast https://www.reuters.com/world/us/gulf-coast-ports-close-loop-halts-oil-deliveries-ahead-hurricane-ida-2021-08-29, forcing shutdowns and evacuations of hundreds of offshore oil platforms.
Brent was up 5 cents or 0.4% at $72.75 a barrel by 0559 GMT. It rose more than 11% last week in anticipation of disruptions to oil production from Ida.
U.S. oil turned negative and was down by 31 cents or 0.5% at $68.43 a barrel, having jumped a little over 10% over last week.
The benchmarks hit highs not seen since early August, $73.69 and $69.64, respectively, earlier in the session, as Ida slammed into the coast near Port Fourchon, Louisiana, a hub of the Gulf’s offshore energy industry.
“It’s still early days to know the full impact of Hurricane Ida,” said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.
Gold was up Monday morning in Asia, continuing to ride a rebound sparked by comments Friday by U.S. Federal Reserve Chairman Jerome Powell that put pressure on Treasury yields and the dollar.
Gold futures were up 0.29% to $1,824 by 9:15 PM ET (1:15 AM GMT).
Speaking at a symposium at Jackson Hole, Wyoming, on Friday, Powell did not say when the Fed would start tapering down its support for the economy and repeated a stance that a current spike in inflation is temporary.
Powell did suggest that the central bank could start tapering off from the massive levels of support for the economy by the end of the year, a bit slower than many had expected, but did not suggest a rush to raise interest rates.
Powell also said that the employment market had improved and that, if the U.S. economy continued to rebound along its current trajectory it “could be appropriate to start reducing the pace of asset purchases this year.”
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