A man wearing a protective face mask talks on his cellphone in front of a screen showing the Nikkei index outside a brokerage in Tokyo, Japan. Picture: REUTERS/ATHIT PERAWONGMETHA
A man wearing a protective face mask talks on his cellphone in front of a screen showing the Nikkei index outside a brokerage in Tokyo, Japan. Picture: REUTERS/ATHIT PERAWONGMETHA

Asian shares rallied on Friday after two days of losses, but were still in a nervous mood as global investors grapple with how best to interpret central banks’ cautious moves to end stimulus, which also left currency markets quiet. 

MSCI’s broadest index of Asia-Pacific shares outside Japan , gained 0.47% in early trading, but is still down about 0.8% compared with last week’s close, in line with the global trend.

Japan’s Nikkei rose 0.25%, and US stock futures, the S&P 500 e-minis, were flat.

Australia gained 0.4% as mining stocks rose after aluminium prices hit multiyear highs, and Chinese blue chips also advanced 0.5%

But gains were lead by Hong Kong with the local benchmark rebounding 1.5% having fallen  more than 2% the day before when Chinese tech stocks took another battering after authorities called gaming companies in for a word. But traders are still cautious about buying too much of the dip.

“At some point in time investors will say actually this is the right price, it’s not going to go to zero,” said John Lau, head of Asian equities and a senior portfolio manager at SEI, referring to Chinese tech names.

“I think most investors will wait until the dust settles and see whether there is enough clarity before they can act, at this point in time its extremely difficult.”

Asian gains followed a wobbly Thursday when markets had struggled to gain clear direction.

Reaction to the European Central Bank (ECB) saying over the coming quarter it would slow emergency bond purchases implemented during the Covid-19 pandemic was constrained by the ECB refraining from detailing how it plans to end its €1.85-trillion Pandemic Emergency Purchase Programme.

“Risk sentiment flip-flopped through the overnight session, initially reacting positively to the ECB meeting and evidence of ongoing strength in the US labour market. However, US equities ended in the red, likely reflecting concerns about the timing of central bank tapering and ongoing Delta woes,” said analysts at ANZ.

The Dow Jones Industrial Average fell 0.43%, the S&P 500 lost 0.46% and the Nasdaq Composite dropped 0.25%.

Investors normally interpret better employment figures as a sign the Federal Reserve is less likely to delay trimming its huge asset purchases, which have been supporting share prices in recent months.

In addition, Federal Reserve Bank governor Michelle Bowman added her voice to the growing number of policymakers who say the weak August jobs report likely will not throw off the central bank’s plan to trim its $120bn in monthly bond purchases later this year.

In currency markets, the euro was flat in Asian hours at $1.1820, after the ECB announcement helped it stem a few days of losses, as it fell off its month high set at the end of last week.

The dollar was also little changed against a basket of peers but on course for nearly a 0.5% weekly rise.

The yield on benchmark 10-year Treasury notes edged up to 1.307% compared with its US close of 1.3%.

US crude dipped 0.1% to $68 a barrel. Brent crude fell 0.15% to $71.34 per barrel.

Reuters

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