Investing.com – Asian stocks rose in afternoon trade on Wednesday, tracking a Wall Street rally after Federal Reserve Chairman Jerome Powell gave a positive assessment of the U.S. economy during his congressional testimony.
Overnight, The Dow rose 55.53 points to 25,119.89, the S&P 500 gained 0.4%, while the Nasdaq hit a record high as Netflix (NASDAQ:NFLX) and tech stocks rebounded.
Powell noted that the central bank is on track to gradually raise interest rate, but warned that protectionism could potentially hinder economic growth.
“In general, countries that have remained open to trade, that haven’t erected barriers including tariffs, have grown faster. They’ve had higher incomes, higher productivity,” he said.
Meanwhile, another U.S. central banker said that the Fed should ease away from money policy accomodation and raise interest rate to avoid inflation as data showed the U.S. economy has improved in recent months.
"At a time of full employment with price stability, policy should be a neutral influence on economic activity," Kansas City Federal Reserve Bank President Esther George said in remarks prepared for delivery to an agricultural symposium. "Gradual further increases in our policy rate will be necessary to return policy to a neutral stance, although there is considerable uncertainty about exactly how far or fast we need to go."
In Asia, China’s Shanghai Composite rose 0.5%, while the Shenzhen Component climbed 0.1%. Hong Kong’s Hang Seng Index also rose 0.3%.
Markets now shift their focus to how the government would react to mitigate the effects of the recent trade dispute with the U.S., after data released Monday showed that output in the second quarter slowed and factory activity cooled more than expected.
Elsewhere, Japan and the European Union signed a trade agreement on Tuesday that would allow more movement of goods and services between the two economies as they seek countermeasures against U.S.’s protectionism. The Economic Partnership Agreement would help Japanese car exports and making it easier for European farmers to sell their produce in the Asian nation. The Nikkei 225 gained 0.6% following the news.
South Korea’s KOSPI added 0.3%. The Bank of Korea cut the country’s economic growth forecast for 2018 in its bi-annual economic policy report, and cited a weak labor market recovery and global trade tension as the reason for the cut.
"Apart from shipments of semiconductors, exports growth came to a halt and investment is shrinking," Do Kyu-sang, a director general at the ministry, said in a press conference. "The economy's capacity to create jobs is weakening," Do said.
Down under, Australia’s S&P/ASX 200 rose 0.8%.