Asian stocks rallied on Friday with investors buoyed by signs of a palpable recovery in China and reassured by less hawkish noises from the US Fed.
Wall Street had reversed losses overnight after remarks by the Atlanta Federal Reserve chief that signalled a more measured approach to raising interest rates.
Global markets had been buffeted by a raft of strong US data over recent weeks, including US jobless claims overnight, that suggested the Fed would need to keep rates higher for longer.
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But investors breathed a sigh of relief after Atlanta Federal Reserve President Raphael Bostic said he favoured “slow and steady” quarter-point US rate increases to limit risk to the economy.
That feeling of relief fed into Asia’s markets with Japan’s Nikkei index closing at a nearly three-month high. And positive data out of China lifted the mood in Tokyo too, sparking hopes of more tourists coming across the East China Sea in the months ahead.
The Nikkei rose 1.56% to close at 27,927.47, its highest level since December 15, and posted its sharpest daily gain since January 18. The index rose 1.73% in the week. The broader Topix rose 1.25% to 2,019.52, adding 1.57% in the week.
China and Hong Kong shares rose as well, led by defence and oil stocks, after a private sector survey confirmed prospects of strong recovery in the world’s second-biggest economy, lifting risk-on appetite.
The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 55.0 in February from 52.9 in January. The 50-point mark separates expansion and contraction in activity on a monthly basis.
China’s blue-chip CSI300 Index edged up 0.03% in early trading, while the Shanghai Composite Index gained 0.54%, or 17.74 points, to end at 3,328.39.
Hong Kong’s benchmark Hang Seng was up 0.68%, or 138.08 points, to finish at 20,567.54. The Hang Seng China Enterprises Index rose 1.03% but the Shenzhen Composite Index on China’s second exchange edged down 0.02%, or 0.51 points, to 2,152.13.
Elsewhere across the region, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were all in the green.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7%, on track for its first weekly rise in five. The index is up 1.6% so far this month.
US Dollar Index Slips
Globally, European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 0.59%, German DAX futures up 0.39% and FTSE futures advancing 0.31%.
US stock futures, the S&P 500 e-minis, were down 0.13%, but the major indexes ended up in regular trading overnight.
US stocks rose on Thursday, reversing earlier losses, as Treasury yields pulled back from earlier highs, following the rates comments from Atlanta Fed President Bostic.
The Dow Jones Industrial Average rose around 1%, while the S&P 500 and Nasdaq Composite both gained around 0.75%, even as Tesla Inc fell nearly 6% after the company failed to impress investors with few details on its plan to unveil an affordable electric vehicle.
The yield on benchmark 10-year Treasury notes touched 4.0501% compared with its US close of 4.073% on Thursday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, rose to 4.8879% compared with a US close of 4.904%.
The dollar index, which tracks the greenback against a basket of other major currencies, was down at 104.82. The index is now up more than 1% for the year but still down from a September high around $114.
The dollar eased 0.11% to 136.61 yen, after climbing to 137.10 overnight, the highest since December 20.
In the energy market, oil prices remained firm, boosted by signs of a strong economic rebound in top crude importer China and easing worries of aggressive US rate hikes.
US crude dipped 0.13% to $78.06 a barrel. Brent crude touched $84.66 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.56% at 27,927.47 (close)
Hong Kong – Hang Seng Index > UP 0.68% at 20,567.54 (close)
Shanghai – Composite > UP 0.54% at 3,328.39 (close)
London – FTSE 100 > UP 0.22% at 7,961.72 (0940 GMT)
New York – Dow > UP 1.05% at 33,003.57 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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