In a speech on Friday, Federal Reserve Chairman Jerome Powell indicated the central bank would be cautious in winding down its ultra-loose monetary policy and was in no hurry to lift interest rates.

An investor watches a board showing stock information at a brokerage office in Beijing, China on October 8, 2018.
An investor watches a board showing stock information at a brokerage office in Beijing, China on October 8, 2018. (Reuters)

Asian shares have perked up and the dollar fell to two-week lows after US Federal Reserve Chairman Jerome Powell struck a dovish tone at the central bank's long-awaited symposium, although investors remained cautious about prospects in China.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.65 percent to a two-week high, and Japan's Nikkei rose 0.46 percent.

Hong Kong rose 0.32 percent, Australia 0.2 percent and Korea 0.25 percent but Chinese blue chips bucked the trend, falling 0.26 percent.

"(Powell) really soothed the market's concerns for now, as the Fed is extremely good at doing, and money is going back to the US, not that it ever really left," said Daniel Lam, senior cross-asset strategist, at Standard Chartered Wealth Management.

Lam said there were fewer uncertainties in the United States than in Asia and specifically China, though he added that any further rotation away from Asia would be more incremental "and less dramatic than we saw in July and early August because a lot of people have already left."

READ MORE: China's trade with US shrinks as tariff war worsens

Concerns over China

Chinese companies in sectors from tech to property have been roiled by a series of regulatory crackdowns, spooking some investors and pushing the Hong Kong benchmark to 2021 lows earlier this month.

There are also signs that Chinese growth is slowing and so traders are closely watching purchasing manager surveys for manufacturing and services, which are both due this week.

US stock futures, the S&P 500 e-minis, rose 0.04 percent, and pan-region Euro Stoxx 50 futures were up 0.08 percent. Britain is closed on Monday for a bank holiday.

Investors had been waiting to see whether Powell would give a clear indication of his views on the timing of the central bank's tapering of asset purchases or hiking interest rates, which could drag on equity markets.

However, in his prepared remarks, Powell offered no indication on cutting asset purchases beyond saying it could be "this year".

This dovish tone caused US benchmark Treasury yields and the dollar to slip on Friday, with both trends extending into Monday trading in Asia.

The yield on benchmark 10-year Treasury notes was 1.3071 percent down from last week's high of 1.375 percent, but little changed from last week's close.

The dollar index which measures the greenback against a basket of currencies was fairly steady at a two-week low, having fallen 0.4 percent after Powell's remarks.

"There's a general sense of a bit of a consolidation after Friday's news," said Rodrigo Catril, senior FX strategist at National Bank of Australia. "The dollar is technically underperforming on the day, but there's a lot of data coming out this week from China and the US with non-farm payrolls on Friday."

Powell has suggested an improvement in the labour market is one major remaining prerequisite for action, hence a particular focus on Friday's jobs figures.

Investors in China, in contrast, are watching data this week to see whether they indicate policymakers are more likely to step up easing measures.

READ MORE: IMF allocates record $650B to help countries offset pandemic effects

Focus on oil prices

Oil was also in focus after energy firms suspended 1.74 million barrels per day of oil production in the US Gulf of Mexico as Hurricane Ida slammed into the Louisiana coast as a Category 4 storm.

Prices initially rose on Monday morning, but US crude later gave up those gains, falling 0.31 percent to $68.52 a barrel. Brent crude pared gains and was last up 0.14 percent at $72.80 per barrel.

Gold was steady, with the spot price at $1,816.2 per ounce, down 0.1 percent, having touched its highest in three weeks earlier in the session.

Source: TRTWorld and agencies