Asian shares rallied on Friday amid growing optimism about China’s post-Covid recovery with Beijing claiming the worst was over and virus numbers had peaked.
At the same time, the US dollar edged up from near its weakest since May and Treasury yields were raised as investors weighed the outlook for further Federal Reserve policy tightening and the associated risks of a global recession.
The lift in the dollar saw the yen dip and that eased the pressure on Japan’s exporters where the Nikkei share average reversed its early losses to end higher.
Also on AF: Tourists’ Return Set to Boost Thai Lunar New Year Spending
The Nikkei ended the day up 0.56% at 26,553.53, having fallen as much as 0.3% earlier in the day tracking Wall Street losses. The index posted a 1.66% weekly gain.
The broader Topix rose 0.59% to 1,926.87 and gained 1.25% for the week.
Airlines jumped 3.18% to lead the Tokyo Stock Exchange rally, after Prime Minister Fumio Kishida said the nation will consider revising its Covid-19 measures as early as this spring, downgrading the disease to a less serious category.
Japanese government bond yields stayed depressed, two days after the Bank of Japan defied investor pressure to loosen yield curve controls further.
China stocks ended higher ahead of the Lunar New Year holidays, as strong foreign inflows boosted sentiment after the country claimed it was winning its battle with Covid.
But that announcement came ahead of what is expected to be the busiest day of travel in years on Friday, a mass movement of people that has fed fears of a further surge in infections.
China Lending Rates Unchanged
China’s blue-chip CSI 300 Index added 0.6%, touching a 5-month high, and the Shanghai Composite Index gained 0.76%, or 24.53 points, to 3,264.81
Hong Kong’s Hang Seng Index rose 1.82%, or 393.67 points, to close at 22,044.65, while the Hang Seng China Enterprises Index climbed 2.3%.
The Shenzhen Composite Index on China’s second exchange edged up 0.65%, or 13.71 points, to 2,125.81
In the week ahead of China’s new year holidays, the CSI 300 Index added 2.6%, while the Hang Seng benchmark was up 1.4%.
Separately, China kept benchmark lending rates unchanged for a fifth month on Friday, as expected, but analysts say future cuts are possible as the central bank has pledged to support the Covid-ravaged economy.
Indian stocks fell with Mumbai’s signature Nifty 50 index down 0.44%, or 80.20 points, at 18,027.65.
US Dollar Edges Ahead
Asian markets’ rise came despite a sell-off on Wall Street overnight, with the S&P 500 losing 0.76%. E-Mini futures indicated a small bounce at the reopen though, gaining 0.2%.
Sentiment improved during the Wall Street session, when investor worries about more Fed tightening were heightened by robust US employment data and fresh hawkish rhetoric from central bank officials.
Weekly jobless claims were lower than expected, pointing to a tight labour market.
The dollar index, which measures the greenback against six peers including the euro and yen, edged 0.14% higher to 102.17, adding a bit more distance from the 7-and-a-half-month low of 101.51 reached on Wednesday.
The benchmark 10-year Treasury yield was around 3.415% after bouncing off the lowest since mid-September at 3.321% overnight.
Elsewhere, crude oil prices continued to rise. Brent futures for March delivery gained 30 cents, or 0.35%, to $86.46 a barrel, while US crude advanced 49 cents to $80.82 per barrel, a 0.6% gain.
Key figures
Tokyo – Nikkei 225 > UP 0.56% at 26,553.53 (close)
Hong Kong – Hang Seng Index > UP 1.82% at 22,044.65 (close)
Shanghai – Composite > UP 0.76% at 3,264.81 (close)
London – FTSE 100 > UP 0.42% at 7,779.58 (0940 GMT)
New York – Dow < DOWN 0.76% at 33,044.56 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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