Asia markets were mixed Wednesday morning, following a higher finish in US equities overnight after remarks from Federal Reserve chair Janet Yellen appeared dovish enough to assuage concerns about a near-term interest rate hike.

Japan's Nikkei 225 was off by 0.51 percent immediately after market open, while across the Korean Strait, the Kospi was up 0.49 percent.

Before market open, Reuters reported Japan's industrial output data showed fragile factory activity due to sluggish demand both at home and abroad. Industrial output fell 6.2 percent on-month in February, compared with a expectations from a Reuters poll for a 6 percent decline, following a 3.7 percent gain in January.

Australia's ASX 200 was up 0.54 percent in early trade, buoyed by a 1.04 percent gain in the financials subindex. Banking stocks were mostly positive, after the country's so-called Big Four banks sold off sharply on Tuesday on concerns over potential bad debt from their exposure to the resources and energy sectors.

Shares of ANZ were up 0.26 percent, Commonwealth Bank of Australia added 0.7 percent, Westpac rose 0.13 percent and NAB gained 0.62 percent Tuesday morning.

Overnight, speaking to the Economic Club of New York, Yellen noted in prepared remarks that it is appropriate for policymakers to proceed "cautiously." She noted recent readings on the strength of the US economy since the beginning of the year have been mixed. On the policy front, she said research suggests that, with a funds rate at zero and increased uncertainty, the best policy is greater gradualism. Still, the Fed can hike if the economy grows faster, she said.

Evan Lucas, market strategist at IG, said in a morning note that Yellen's speech has "painted a very dovish picture for the inflation outlook in 2016 and although she didn't directly use this term, she clearly sees the US economy as two-speed."

"Employment and net wealth have been positives over the past seven years, yet net exports and manufacturing are shrinking and dragging on growth, which is causing a mixed picture," Lucas added.

In the wake of Yellen's comments, the dollar index, which measures the strength of the dollar against a basket of currencies, retreated to the 95 handle, trading at 95.188 as of 8:09 a.m. HK/SIN, compared with levels above 96 before the remarks.

The Japanese yen strengthened against the dollar, with the dollar/yen pair trading down 0.2 percent at 112.46, compared with levels above 113 earlier in the week. Major exporters were lower, with Toyota off 1.64 percent, Nissan off 2.27 percent and Honda down 1.48 percent. A stronger yen is a negative for exporters as it lowers the value of their repatriated profits and makes their products less competitive overseas.

Down Under, the Australian dollar also strengthened after Yellen's remarks, fetching USD 0.7647, compared with levels around USD 0.7530 on Tuesday prior to the speech.

Oil prices fell overnight, with US crude futures settling USD 1.11 lower at USD 38.28 a barrel, while the global benchmark Brent settled down USD 1.13 at USD 39.14.

Reuters reported that the decision by Kuwait and Saudi Arabia to resume oil production at the jointly operated 300,000-barrel-per-day Khafji field, at a time when production is supposed to be frozen, triggered the selloff in oil.

US equities closed up overnight, with the Dow Jones industrial average higher by 0.56 percent, the S&P 500 up by 0.88 percent and the Nasdaq composite adding 1.67 percent.

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First Published:Mar 30, 2016 7:50 AM IST