HONG KONG (Nikkei Markets) -- Asian shares outside of Japan rebounded Wednesday ahead of Federal Reserve Chairman Jerome Powell's comments on U.S. interest rates and economy.
The Nikkei Asia300 Index of companies added 0.5% to 1,309.83 after having fallen by more than 2% in the previous two sessions. Heavyweight Tencent Holdings climbed 1.7%, while Bank of China (BOC) led mainland lenders higher, adding 0.3%. An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, closed 0.5% higher after posting a total loss of 2.5% on Monday and Tuesday.
Later Wednesday, Powell will deliver to lawmakers his thoughts on the U.S. economy and possibly the likely direction of the monetary policy. His testimony has gathered significance in light of the differences among economists over the outcome of the Fed meeting on July 30-31.
While the Fed fund futures have priced in a near 100% probability of a 25 basis-point rate cut, some economists think that there is a possibility of a deeper cut. However, some think that there will be no change.
Following an upbeat U.S. jobs report last Friday, which came on the back of better-than-expected U.S. manufacturing data, there is a risk that the Powell may adopt a tone that is not as accommodative as the market expects.
"Powell's testimony will be scrutinized for both his views on the economic situation and guidance in terms of any upcoming moves," said Jingyi Pan, a market strategist at IG Asia. While the latest U.S. jobs report had undone a portion of the market's dovish expectations, risks remain that traders are overpricing the Fed's accommodativeness, she added.
The dollar index and Treasury yields were hovering near three-week highs ahead of the testimony. U.S. equities were just shy of record highs. The minutes of the Fed June meeting is due after Powell's testimony.
Meanwhile, on the U.S. and China trade front, multiple media reports said that top U.S. and Chinese officials talked over the phone yesterday about holding a face-to-face meeting.
India's biggest software company Tata Consultancy Services declined 1.1% to 2,107.70 rupees after its sequential first-quarter revenue growth of 1.6% in dollar terms fell short of estimates.
Hyundai Engineering & Construction closed 1.3% higher. The company reportedly signed contracts worth 3.2 trillion won ($2.7 billion) with Saudi Aramco.
Great Wall Motor fell 1.2%. The Chinese carmaker said June sales volume increased by less than 2% from a year ago.
Asustek Computer declined 0.2% after the Taiwanese company said sales in June fell 9.6% from a year ago. Compal Electronics dipped 0.2% following a 3.5% decline. United Microelectronics jumped 4.6% and Innolux advanced 1.8% despite a year-on-year decline in sales.