(Bloomberg) -- Stocks in Asia edged higher Wednesday following a late rally in US shares in a volatile session after Federal Reserve Chair Jerome Powell rebuffed an opportunity to tamp down investor optimism.
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Equities in Australia and Japan rose while futures contracts in Hong Kong fell. US futures inched lower to moderate a Tuesday rally. The S&P 500 advanced more than 1%, reversing a 0.6% drop. The tech-heavy Nasdaq 100 outperformed major benchmarks, climbing more than 2%.
Australian bonds dropped in early trading following declines in Treasuries on Tuesday that pushed the benchmark 10-year yield three basis points higher to 3.67%. An index of the dollar weakened to extend a drop in the prior session.
The yen steadied after rallying more than 1% Tuesday, while the Aussie edged higher after also gaining more than 1% following the Reserve Bank of Australia's decision to increase interest rates Tuesday.
Powell's sober comments echoed those made after last week's FOMC meeting, soothing traders who were expecting the Fed chief to push back on the loosening of financial conditions and Friday's bumper jobs report. Powell highlighted that disinflation has begun, and that further hikes will likely be needed if the jobs market remains strong.
In separate comments Minneapolis Fed President Neel Kashkari said the Fed would likely have to raise interest rates to 5.4% at the top of its target range given the strength in the US jobs market. The Fed increased rates 25 basis points last week to a band of 4.5% to 4.75%.
"The important takeaway is that Powell had a chance to signal a shift to a more aggressive posture and he didn't take it," wrote Bill Adams, chief economist for Comerica Bank in Dallas. "In the near-term, the Fed will likely continue to make one (or perhaps two) more hike(s) before going on hold."
Investors will be paying close attention to shares in Adani companies after its flagship jumped by the most since Hindenburg Research's scathing report two weeks ago. Hedge fund and distressed debt investors have begun snapping up Adani company bonds. Ratings agency Moody's said in a report that Indian banks' exposure to the Adani Group is not large enough to impact their credit quality.
Elsewhere in markets the oil price rose further after a 4.1% surge on Tuesday, its biggest one-day move since November, helped along by a rebound in demand from China.
Traders will also keep a close eye on Joe Biden's speech to a joint session of Congress on Tuesday evening in Washington in light of renewed tensions with China and a brewing showdown with House Republicans over raising the federal debt ceiling.
Key events:
US wholesale inventories, Wednesday
New York Fed President John Williams is interviewed at Wall Street Journal live event, Wednesday
US initial jobless claims, Thursday
ECB President Christine Lagarde participates in EU leaders summit, Thursday
Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday
US University of Michigan consumer sentiment, Friday
Fed's Christopher Waller and Patrick Harker speak, Friday
Some of the main moves in markets as of 9:12 a.m. Tokyo time:
Stocks
S&P 500 futures fell 0.2%. The S&P 500 rose 1.3%
Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2.1%
Hang Seng futures fell 0.9%
Japan's Topix rose 0.1%
Australia's S&P/ASX 200 rose 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0733
The Japanese yen was little changed at 130.95 per dollar
The offshore yuan rose 0.1% to 6.7761 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $23,239.83
Ether was little changed at $1,669.07
Bonds
The yield on 10-year Treasuries declined one basis point to 3.66%
Australia's 10-year yield advanced five basis points to 3.65%
Commodities
West Texas Intermediate crude rose 0.4% to $77.45 a barrel
Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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