Asian stocks gain, gold and bitcoin retreat amidst Powell testimony

Asian stocks saw gains on Wednesday as traders awaited signals from Beijing during its annual session of parliament. This came after disappointment from the previous lack of stimulus measures, with gold and bitcoin also easing from recent record highs.

Investors were cautious before Federal Reserve Chair Jerome Powell’s congressional testimony later in the day, which will be closely watched for hints on potential interest rate cuts.

Chinese stocks had a mixed day after Beijing announced a 5% growth target for 2024 at a parliament meeting, which lacked significant stimulus measures. The CSI 300 Index was slightly lower, while Hong Kong’s Hang Seng surged 2% higher, recovering from a 2.5% drop on Tuesday.

An economy-focused press conference on Wednesday morning, featuring representatives from the People’s Bank of China and other regulators, will be closely watched by investors for more policy insights.

Overall, Asian trading was subdued with MSCI’s broadest index of Asia-Pacific shares outside Japan initially slipping before rising by 0.46%.

Wall Street had seen declines on Tuesday, particularly in tech stocks like Apple, with the Nasdaq down over 1%. E-mini futures for the S&P 500 were up 0.09%, indicating a positive start.

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In Europe, futures pointed to a slightly higher open, with Eurostoxx 50 up 0.10%, German DAX up 0.14%, and FTSE up 0.05%.

Investors in Britain are focused on the government’s budget, where Finance Minister Jeremy Hunt aims to cut taxes without upsetting bond markets.

In the U.S., recent data showed a slowdown in the services sector and a larger-than-expected drop in new factory orders. The spotlight is now on upcoming payroll data.

U.S. Treasury yields stabilized in Asian trading, currently at 4.147% after hitting a one-month low of 4.112% previously.

Market expectations are leaning towards a 68% chance of the Fed starting rate cuts in June, according to the CME FedWatch tool, with 88 basis points of cuts expected this year.

Federal Reserve Chair Powell’s congressional appearances are seen as significant, though analysts anticipate he will maintain his current message.

In currency markets, the Japanese yen strengthened slightly to 149.93 per dollar, while sterling remained flat at $1.2704 ahead of the UK budget announcement.

The euro was at $1.0853 before the European Central Bank’s policy decision on Thursday, widely expected to keep interest rates at a record low of 4%. Markets are keen for clues on potential rate cuts later in the year.

Cryptocurrency bitcoin hovered around $66,000, down from a record high of $69,202, while spot gold wobbled at $2,127.36 an ounce after reaching an all-time high of $2,141.59.

U.S. crude rose to $78.38 per barrel, and Brent crude was at $82.27, both up around 0.29% on the day.