Asian stocks largely bounced back on Friday, a day after their worst session for three months, after there were renewed hopes on US growth and Japan’s yen settled down following a dramatic few days.
The majority of indexes ended in positive territory but Taiwan, which reopened from a two-day closure due to a typhoon, slumped 3.29% as the tech-heavy equity index caught up with the rout in the rest of the world.
The other outlier was Japan which reversed early gains to extend its losing streak to an eighth session, as investors adjusted positions amid uncertainties about Wall Street following a fickle session.
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The Nikkei fell 0.53% to close at 37,667.41, its lowest close since April 25, after rising as much as 0.6% as investors scooped up stocks that appeared undervalued. For the week, it fell 5.48%, marking its worst week since mid-April.
The broader Topix fell 0.38% to 2,699.54 and lost 5.28% for the week.
The market was also cautious about the Bank of Japan’s policy decision due next week amid growing expectations that the central bank could raise its policy rate.
Heavyweight chip-related stocks fell, with Tokyo Electron falling 4.77% to drag on the Nikkei the most. Advantest lost 3.56%.
China’s stock markets were subdued, influenced by concerns over a sluggish economic recovery and the lack of substantial stimulus measures. Investor sentiment also took a hit from global markets’ weakness.
Earlier this month, China reported poorer-than-expected economic growth, and a key leadership assembly emphasised policy continuity rather than transformative change.
Despite the authorities’ pledge to allocate $41.40 billion for equipment upgrades and consumer trade-ins, confidence in China’s economic recovery remains uncertain.
The Shanghai Composite Index rose 0.14%, or 4.16 points, to end at 2,890.90, while the Shenzhen Composite Index on China’s second exchange advanced 1.43%, or 22.18 points, to 1,569.59.
US PCE Data Wait
Meanwhile, Chinese H-shares in Hong Kong – stocks belonging to companies from the Chinese mainland – slightly dropped, while the Hang Seng Index gained 0.10%, or 16.34 points, to 17,021.31, with investors betting on positive US growth data later in the day.
Elsewhere across the region, in earlier trade, Sydney, Singapore, Seoul, Manila, Mumbai, Bangkok and Jakarta rose along with London, Paris and Frankfurt. Wellington edged down.
MSCI’s broadest index of Asia-Pacific shares was just 0.06% lower on Friday, following a 1.88% tumble the previous day.
US stock futures pointed higher after two days of selling in the cash indexes, with S&P 500 futures rising 0.43% and Nasdaq futures advancing 0.53%. Pan-European Stoxx 50 futures added 0.17%.
US economic data overnight had given some cause for optimism, with growth faster than expected in the second quarter and inflation cooling.
That helped dispel worries that the expansion was in danger of an abrupt end, while also supporting wagers for a Federal Reserve interest rate cut in September.
Friday’s release of the PCE deflator, one of the Fed’s preferred price gauges, will be “the next test, and arguably climax to the week’s trade”, said Kyle Rodda, a senior market analyst at Capital.com.
Oil Prices Rise
Safe-haven demand for the yen cooled overnight, and an unwinding of long-held bearish bets lost steam after the Japanese currency gained some 2.5% this week against the dollar, putting it on track for its best performance since late April.
The dollar last traded 0.19% lower at 153.67 yen, after dropping as low as 151.945 on Thursday for the first time since May 3, and then springing back by the end of the trading day. The BOJ and the Federal Reserve both announce policy decisions on July 31.
US two-year Treasury yields eased slightly in Asian hours to 4.4348% but were well off the overnight low of 4.34%, a level last seen in early February. The 10-year yield was down slightly at 4.2445%.
Elsewhere in currency markets, the euro rose 0.13% to $1.0857 and sterling added 0.11% for $1.2864.
Oil prices rose slightly as the stronger-than-expected US economic data raised expectations for increased crude demand from the world’s largest energy consumer.
Brent crude futures for September rose 12 cents to $82.49 a barrel. US West Texas Intermediate crude for September increased 13 cents to $78.41 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 0.53% at 37,667.41 (close)
Hong Kong – Hang Seng Index > UP 0.10% at 17,021.31 (close)
Shanghai – Composite > UP 0.14% at 2,890.90 (close)
London – FTSE 100 > UP 0.92% at 8,261.43 (0933 BST)
New York – Dow > UP 0.20% at 39,935.07 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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