Asian Shares Still On Decline, Dollar Steady

On Thursday, Asian stocks shook and the dollar hovered near a three-month high after a slew of economic data appeared to back up Federal Reserve Chairman Jerome Powell's hawkish guidance on further interest rate hikes.

Powell maintained his message of higher and potentially faster interest rate hikes on Capitol Hill on his second day, but emphasised that debate was still ongoing, with a decision hinged on data to be released before the US central bank's policy meeting in two weeks.

With riskier assets still reeling from the heavy sell-off a day earlier, investors are looking for confirmation that continued strong job growth supports higher interest rates, which is due on Friday.

After January's 517,000 increase caused markets to reprioritize monetary tightening expectations, forecasts are centred on a more modest increase of 205,000.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2% on Thursday, adding to a 1.4% drop the previous session. The Nikkei 225 index in Japan, on the other hand, rose 0.6%.

Both China's blue chips and Hong Kong's Hang Seng Index fell 0.2%. S&P 500 futures fell 0.1%, while Nasdaq futures fell 0.3%.

China's inflation data showed on Thursday that domestic demand remained subdued.

In the United States, data released overnight painted a picture of a strong economy, but did little to allay fears that the Federal Reserve will ease up on its relentless rate hikes.

Despite the ongoing rise in mortgage rates, job openings remain high, private payrolls exceeded consensus estimates, and demand for home loans increased.

"It's difficult to see this as clarifying the employment picture ahead of tomorrow's payrolls release, which remains a lottery," said Robert Carnell, ING's Asia Pacific regional head of research.

"Although essentially the same message, Powell's tone yesterday to Congress was regarded by many commentators as slightly softer, noting that data would be the final arbiter of the size of the next hike and that no decision on the size of the March hike had yet been made."

Throughout the day, the major U.S. stock indexes fluctuated between modest gains and losses, with the Nasdaq joining the S&P 500 in positive territory at the closing bell and the Dow posting a modest loss.

According to CME's FedWatch tool, financial markets now expect the Fed to raise the key interest rate by 50 basis points at the end of its March meeting, up from around 30% at the start of the week.

The US dollar index, which measures the value of the greenback against a basket of major peers, was close to a three-month high at 105.6. It fell 0.2 percent against the Japanese yen, trading at 137.04 per dollar, as Japan's economy grew at a much slower rate than previously estimated in the fourth quarter.

The dollar rose against the Canadian dollar to $1.3802 Canadian dollars, its highest level in four months, thanks to a dovish Bank of Canada.

The central bank left its key overnight interest rate unchanged on Wednesday, becoming the first major central bank to halt its monetary tightening campaign.

On Thursday, two-year Treasury yields remained near 15-year highs at 5.0553 percent, while benchmark 10-year yields remained stable at 3.9775 percent.

The gap between yields on two-year and 10-year Treasury notes was at a negative 108.2 basis points, the most inverted since 1981, according to a closely watched part of the US Treasury yield curve. An inversion of this type is regarded as a reliable recession indicator.

In the crypto world, Silvergate Capital Corp announced on Wednesday that it would wind down operations and voluntarily liquidate after suffering losses as a result of the dramatic collapse of crypto exchange FTX, sending its shares down 35% in after-hours trading.

On Thursday, oil prices remained largely stable. The price of US crude oil remained stable at $76.66 per barrel. Brent crude remained mostly unchanged at $82.67 per barrel.

Gold was marginally higher. The spot price of gold was $1814.79 per ounce.