Asian stocks buoyed by Wall Street’s tech rally
Tokyo — Asian stocks inched up on Friday, following a tech-led rise on Wall Street.
However, the latest exchange of trade threats between Beijing and Washington limited gains and drove safe-haven flows to the dollar, which brushed a two-week high.
Investors also remain cautious ahead of the July US jobs report, due later on Friday, which will give a reading on the health of the world’s largest economy and possible clues about the pace of Federal Reserve interest rate rises.
Spread betters expected European stocks to focus more on the overnight rise by US shares and open higher, with Britain’s FTSE rising 0.55%, Germany’s DAX gaining 0.35% and France’s CAC adding 0.5%.
MSCI’s broadest index of Asia-Pacific shares outside Japan swerved in and out of the red and was last up 0.02%. The index was still down more than 0.6% for the week, though, due to the US-China trade tension.
The trade war between the world’s top two economies intensified midweek after US President Donald Trump raised pressure on China by proposing a higher tariff of 25% on $200bn worth of Chinese imports.
"The equity markets now have time to regroup and settle down after [Thursday’s] slide. But the US-China trade conflict involves the epicentre of the region and this will continue to weigh psychologically on Asian equities," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
The Shanghai composite index was last up 0.08%, after dropping 2% the previous day.
Japan’s Nikkei crawled up 0.1%, with the focus turning to the August. 9 trade talks between Washington and Tokyo.
Masahiro Ayukai, senior strategist at Mitsubishi UFJ Morgan Stanley Securities, said Japanese stocks could face even more pressure from the trade talks in addition to existing concern about the tariffs the US is threatening to impose on China.
Tech-heavy Taiwanese and South Korean stocks outperformed thanks to the gains on Wall Street, rising 0.65% and 0.55% respectively.
Technology stocks pushed the S&P 500 and Nasdaq higher on Thursday, driven by Apple shares as the iPhone maker became the first publicly traded US company to be valued at $1-trillion.
In foreign exchange, the dollar index against a basket of six major currencies extended its overnight gains, rising to a two-week high of 95.211 before easing slightly to 95.131.
Trade tensions were said to be driving demand for the US currency, with a slide by the pound providing an extra lift.
Sterling dropped more than 0.8% on Thursday despite the Bank of England lifting interest rates, after governor Mark Carney said monetary policy needed to "walk not run", and expressed concern about the risks of a cliff-edge Brexit.
The euro was little changed at $1.1592 following a loss of 0.6% the previous day.
Concern over Italy weighed on the euro, with the country’s bond yields rising to two-month highs, after media reports of a government meeting on the budget revived concern about tension within the ruling coalition.
Against the yen, the dollar added 0.05% to ¥111.68, having gained about 0.6% this week. The dollar received a big boost against the yen earlier this week after the Bank of Japan tweaked its monetary policy but retained its commitment to keeping interest rates low.
Financial markets are now looking to the July jobs US report due later in the session for immediate cues.
According to a Reuters survey of economists, nonfarm payrolls probably rose by 190,000 jobs in July after increasing by 213,000 in June.
Average hourly earnings are forecast to have increased 0.3% in July after rising 0.2% in June.
With trade tension generating investor demand for safe-haven assets, the 10-year US Treasury note yield pulled back slightly to 2.987% from a 10-week high above 3% brushed midweek.
The 10-year Treasury yield was pushed to the 10-week peak partly due to a surge in Japanese government bond yields, which rose to one-and-a-half-year highs this week as the market tested the Bank of Japan’s rejigged policy framework, under which it now allows yields to fluctuate in a wider band.
Crude oil prices eased back a touch after the previous day’s rally, which was driven by an industry report suggesting US crude stockpiles would soon decline again after a surprise rise in the latest week.
Brent crude futures were down 0.07% at $73.40 a barrel after surging 1.5% on Thursday.
Copper on the London Metal Exchange slipped 0.5% to $6,112.50 a tonne. With trade tension hurting demand, the industrial metal was down 2.9% for the week.