Asian stocks drift lower amid mixed Japan cues; Powell speech looms

Investing.com-- Most Asian stocks fell on Friday as markets gauged hawkish comments from the Bank of Japan and mixed Japanese inflation data, with focus turning squarely to an upcoming address by the Federal Reserve Chairman.

Regional markets took a weak lead-in from Wall Street, as a rebound in Treasury yields and a sharp selldown in technology shares sparked steep overnight losses. 

U.S. stock index futures rose in Asian trade, with all eyes on an address by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium later on Friday. 

Powell’s address comes amid growing conviction that the Fed will cut interest rates in September.  But signs of a rapidly cooling labor market also fueled concerns over a slowdown in the U.S. economy, which cooled risk appetite this week.

Japanese stocks drift lower amid hawkish BOJ talk, mixed CPI 

Japan’s Nikkei 225 and TOPIX indexes fell about 0.2% each, with both indexes set for a middling end to the week as a rebound from early-August losses stalled. 

BOJ Governor Kazuo Ueda said in a parliamentary hearing that he still saw interest rates as very low, and that they needed to increase further to reach a neutral level. Ueda also reiterated plans to raise interest rates further if inflation remained steady- his comments coming after the BOJ hiked rates in an end-July meeting.

But Ueda’s comments were somewhat undermined by mixed consumer price index inflation data for July. The reading showed that core and headline CPI inflation rose on improved consumer spending and higher wages.

But underlying inflation- which excludes food and energy costs and is a key inflation metric for the BOJ- fell below the bank’s 2% annual target.

The reading raised some doubts over just how much headroom the BOJ has to keep raising rates.

Japanese markets were rattled by a hawkish BOJ earlier in August, although they did recoup a bulk of their last week.

Asian stocks weak, tech tracks Wall St losses

Broader Asian markets mostly edged lower, and were set for a middling weekly performance as a rebound from early Augusts’ losses stalled. 

Technology-heavy indexes saw relatively bigger losses, tracking losses in their U.S. peers as anticipation of earnings from market darling NVIDIA Corporation (NASDAQ:NVDA), due next week, also sparked caution. 

South Korea’s KOSPI fell 0.5%, while Hong Kong’s Hang Seng index lost 0.9% on losses in major Chinese internet stocks. 

Chinese stocks remained close to six-month lows, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes moving in a flat-to-low range on Friday. The two were also headed for a 1% decline this week.

Australia’s ASX 200 fell 0.3%, while futures for India’s Nifty 50 index pointed to a mildly positive open although the index is expected to face resistance at the 25,000 level.