Asian shares crept ahead on Friday as traders positioned themselves ahead crucial US jobs data due out later in the day.
With most major bourses shut for Good Friday, investors were loath to chase the market higher, but there was a boost to sentiment in China with signs of strong capital inflows and hopes of improving ties between Beijing and Europe
Japan’s Nikkei share average gained, trimming its weekly decline, as a weaker yen and higher Wall Street close overnight boosted sentiment.
The Nikkei rose 0.17%, or 45.68 points, to close at 27,518.31, after earlier touching 27,591.15.
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In the first week of Japan’s new fiscal year, the index reached a nearly one-month high of 28,287.42 on Tuesday, only to then slide with global equities as a spate of weak US economic data fuelled worries about a recession. It’s on track for a 1.9% weekly decline, its first losing week in three.
The broader Topix gained 0.21%, or 4.16 points, to 1,965.44, but remained on track for a 1.8% loss for the week.
The safe-haven yen retreated overnight after reaching its strongest level since March 28 earlier in the week, and traded little changed at 131.67 per dollar.
That helped automakers in particular, with Mazda rising 1.5% and Subaru gaining 1.58%. Toyota added 0.33%. Banking was the best performer among the Tokyo Stock Exchange’s 33 industry sectors, jumping 1.46%.
China stocks rose to a one-month high, buoyed by an uplift in capital inflows and signs of a defrost in relations between China and Europe. Hong Kong’s markets were closed.
China Inflows Surge
Foreign investors ploughed money into Chinese stocks and bonds in March, latest data from the Institute of International Finance (IIF) showed.
Flows into Chinese stocks more than doubled from February to $7.2 billion, bringing total investment into Chinese equities this year to $30 billion, with the removal of Covid-19 restrictions still boosting markets, according to IIF.
The market was also aided by hopes of improvement in China-Europe ties following years of souring relationships.
European Union chief Ursula von der Leyen and French President Emmanuel Macron met Chinese President Xi Jinping in Beijing. In the closely-watched talks, Macron said the West must engage China to help end the Ukraine crisis and prevent “spiralling” tensions that could split global powers into warring blocs.
The Shanghai Composite Index rose 0.45%, or 15.02 points, to 3,327.65, while the Shenzhen Composite Index on China’s second exchange advanced 0.93%, or 19.83 points, to 2,158.41.
Elsewhere across the region, Seoul led gains, piling on more than 1% as heavyweight Samsung rallied after it said it would cut chip production owing to weak demand, lifting hopes for a spike in prices. Bangkok and Taipei were also up.
US Indexes Bounce Back
Overnight, US stocks reversed an earlier sell-off to close higher on Thursday, and Treasury yields steadied, as investors digested weak labour market data ahead of the US jobs report, seeking signs the Federal Reserve could pause on rate hikes.
All three major US stock indexes bounced back, turning green by early afternoon. Even so, the S&P 500 and Nasdaq finished the holiday-shortened week lower after three weeks of gains. The blue-chip Dow gained on the week.
Financial markets have priced in 47% likelihood that the central bank will leave the Fed funds target rate at the 4.75% to 5.00% range at the conclusion of the next monetary policy meeting in May, and a 53% chance of 25-basis-point hike, according to CME’s FedWatch tool.
“It’s kind of a 50/50 from investors whether there will be a rate hike at the next Fed meeting,” said Tom Hanlin, national investment strategist at US Bank Wealth Management in Minneapolis.
“Investors are pricing in rate cuts before year-end, but the Fed has said they will keep rates at a high level for as long as it takes. That gap is what’s causing volatility in the markets,” Hanlin added.
Crude Prices Settle
European stocks closed higher, led by gains in real estate and travel stocks, along with solid industrial production data from Germany. The pan-European STOXX 600 index rose 0.51% and MSCI’s gauge of stocks across the globe gained 0.15%.
US 10-year Treasury yields inched higher following the jobless claims report, snapping a recent series sharp declines.
The greenback seesawed against a basket of world currencies in advance of Friday’s non-farm payrolls report. The dollar index rose 0.05%, with the euro up 0.17% to $1.0921.
Crude prices settled higher, and notched a weekly gain following OPEC+ production cuts and a drop in US oil inventories. US crude edged up 0.11% to settle at $80.70 per barrel, and Brent settled at $85.12 per barrel, up 0.15% on the day.
Gold dipped, extending losses as Wall Street rebounded, but the safe-haven metal posted a weekly gain on growing recession jitters. Spot gold dropped 0.7% to $2,007.19 an ounce.
Key figures
Tokyo – Nikkei 225 > UP 0.17% at 27,518.31 (close)
Hong Kong – Hang Seng Index <> CLOSED
Shanghai – Composite > UP 0.45% at 3,327.65 (close)
London – FTSE 100 <> CLOSED
New York – Dow > UP 0.01% at 33,485.29 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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