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Asia Stocks Mostly Slide as Investors React to Comments From Central Bank Leaders in China, U.S.

Toru Hanai | Bloomberg via Getty Images
  • Shares in Asia-Pacific were largely lower on Friday.
  • China's central bank will maintain prudent monetary policy and increase support for the economy, Governor Yi Gang said Friday as part of the annual Boao Forum for Asia. Yi said the priority for China's monetary policy is ensuring stable prices, especially in food and energy.
  • U.S. Federal Reserve Chairman Jerome Powell said Thursday the central bank is committed to hiking rates "expeditiously" to tame inflation.

SINGAPORE — Shares in Asia-Pacific were mostly lower on Friday as investors watched for market reaction to comments from the Chinese central bank governor Yi Gang as well as overnight remarks from U.S. Federal Reserve Chairman Jerome Powell.

Mainland Chinese stocks closed mixed, with the Shanghai composite rising 0.23% to 3,086.92 while the Shenzhen component dipped 0.294% to 11,051.70.

China's central bank will maintain prudent monetary policy and increase support for the economy, Governor Yi Gang said Friday as part of the annual Boao Forum for Asia. Yi said the priority for China's monetary policy is ensuring stable prices, especially in food and energy.

Yi's comments come as investors have been watching for signs of policy support from Chinese authorities. China's markets have struggled for gains most of this week as investors worry about a range of concerns from the country's economic outlook to an ongoing Covid outbreak on the mainland.

"From the investor point of view and especially from an equity point of view, the words are great but there has to be some meaning and there actually has to be some action," Andrew Maynard, managing director and head of equities at China Renaissance, told CNBC's "Street Signs Asia" on Friday.

"I think investors have got to the point where they're just now … at a stage where we wait and see. If something actually does materialize then China looks a very attractive place yet again but until that actually happens I think we're in this quagmire and these downward trends to come for a while yet," said Maynard.

Hong Kong's Hang Seng index pared some losses after falling more than 2% earlier. It closed 0.21% lower at 20,638.52 as shares of Chinese tech giants Tencent and Alibaba dropped 2.13% and 1.42%, respectively.

The Nikkei 225 in Japan led losses among the region's major markets, declining 1.63% to close at 27,105.26 as shares of conglomerate SoftBank Group dropped 3.01%. The Topix index shed 1.19% to 1,905.15.

South Korea's Kospi ended the trading day 0.86% lower at 2,704.71. Australian stocks declined as the S&P/ASX 200 dipped 1.57% on the day to 7,473.30.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.98%.

Fed watch

Powell hinted at more aggressive rate hikes ahead by the central bank as it seeks to bring down inflation. He said the Fed is committed to hiking rates "expeditiously" to tame inflation.

"I would say 50 basis points will be on the table for the May meeting," Powell said. Following those comments, expectations for a 50 basis point move in May rose to 97.6%, according to the CME Group's FedWatch Tool.

"The long of the short of it is: rates are going to go up, the Fed wants to keep pushing them up a lot and they will keep doing so until something breaks. The question is: what will break and when?" said Michael Every, global strategist at Rabobank.

U.S. Treasury yields also jumped on the back of Powell's comments. The yield on the benchmark 10-year Treasury note, which started the year near 1.5%, last stood at 2.9336%.

Stocks on Wall Street fell overnight stateside, with the S&P 500 slipping about 1.48% to 4,393.66. The Dow Jones Industrial Average shed 368.03 points, or 1.05%, to 34,792.76. The tech-heavy Nasdaq Composite lagged, dropping 2.07% to 13,174.65.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 100.908 — once again above the 100 level that it fell below briefly earlier this week.

The Japanese yen traded at 128.06 per dollar, still weaker as compared with levels below 126 seen last week against the greenback. The Australian dollar was at $0.731 after a recent drop from above $0.744.

Oil prices were lower in the afternoon of Asia trading hours, with international benchmark Brent crude futures down 0.76% to $107.51 per barrel. U.S. crude futures shed 0.74% to $103.02 per barrel.

— CNBC's Evelyn Cheng and Jeff Cox contributed to this report.

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