Asian Stocks See Cautious Start On Fed Easing Doubts And Muted Wall Street Cues

Stocks in the Asia-Pacific region came under pressure on Monday as comments from Federal Reserve Chair Jerome Powell continued to weigh on the markets, and traders assessed the implications of US president-elect Donald Trump's new trade policies.

Equity benchmarks in Japan and Australia led to losses during the session opening. The Nikkei was 408 points, or 1.07%, lower at 38,232, while the S&P ASX 200 was down 16 points, or 0.16%, at 8,269 as of 5:40 a.m.

Future contracts in Hong Kong rose while those in Mainland China pointed to a lower start. Asian stocks fell by 3.9% last week, recording their worst plunge in about six months, according to Bloomberg data.

Fed Chair Powell said on Thursday that the US economy's recent performance has been “remarkably good,” and the economy is "not sending any signals that we need to be in a hurry to lower rates.”

Post his speech, traders trimmed down the possibility of a quarter-point cut at the December FOMC meet with a 56% chance, down from 80% earlier this week, according to Bloomberg News.

Stocks in the US closed last week lower as they erased more than half of the post-election rally with 'Trump Trades' losing steam. The S&P 500 and Dow Jones Industrial Average plunged 1.32% and 0.70%, respectively, while the tech-heavy Nasdaq Composite declined 2.24%.

Stocks in Japan will take centerstage on Monday as the Bank of Japan Governor Kazuo Ueda will give a media briefing with the traders watchful for indications of the next policy move after the yen weakened sharply.

The dollar increased by 1.4% last week, notching a seventh straight weekly gain while the Treasury yields rose after Powell's commentary. The 10-year yield stood at 4.44%.

Later in the week, China’s banks are expected to keep their loan prime rates unchanged while the Bank Indonesia is set to deliver a policy decision.  

Crude oil prices were slightly lower on weak outlook in China coupled with concerns of oversupply. Brent crude was trading 0.10% lower at $70.97 a barrel as of 6:00 a.m. IST. West Texas Intermediate was down 0.27% at $66.84.