(Bloomberg) — Asian stocks extended a rally in global equities as jobs data supported the view that the U.S. economy is headed for a soft landing. The yen gained ground after the Bank of Japan left interest rates unchanged.
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The MSCI Asia Pacific Index rose as stocks in Japan, South Korea and Australia gained, while mainland Chinese stocks fell. A gauge of global stocks hit a new high along with U.S. stocks on Thursday.
The Bank of Japan held monetary policy steady on Friday, signaling it sees no need to rush interest rate hikes as it keeps an eye on financial markets after its July hike and hawkish stances spooked investors. Data released earlier showed the country’s key inflation gauge accelerated in August for a fourth straight month.
“Attention now turns to Governor Ueda’s press conference,” said Shoki Omori, chief strategist at Mizuho in Tokyo. “Depending on the degree of this tone, if the hawkish stance is clearly conveyed to the market, the USD/JPY exchange rate is expected to trend lower.”
Treasury yields were broadly unchanged on Friday, while the dollar strength index remained in a narrow range.
The drop in U.S. jobless claims to their lowest level since May indicated the labor market remains healthy despite slowing hiring. That boosted risk appetite and eased concerns the Fed may have been too slow to cut borrowing costs when it cut rates by half a percentage point on Wednesday.
Stock gains on Thursday and Friday mark a “late euphoric reaction” to the Fed, but one that may subside, according to Nick Ferres, chief investment officer at Singapore-based Vantage Point Asset Management. “Valuation is already heroic and risk compensation is poor, particularly if the earnings cycle disappoints.”
In China, the country is considering removing some of the biggest remaining restrictions on home purchases after previous measures failed to revive a moribund property market, according to people familiar with the matter. That sent BI China’s property owners and developers rating gauge higher.
Meanwhile, the country’s banks kept their benchmark interest rates on hold for September as monetary authorities held off on further monetary stimulus while financial institutions struggle with historically low profit margins. The Securities Times reported on Friday that the Fed’s rate cut this week has given China room to increase monetary and fiscal stimulus to support the economy.
The European Union and China have agreed to step up discussions to avert the imminent imposition of tariffs on electric cars ahead of a deadline that is just days away.
Meanwhile, Wall Street banks are divided over the pace and scope of the Fed’s next rate cuts. JPMorgan Chase & Co. expects another 50-basis-point reduction in November, while Goldman Sachs Group Inc. anticipates 25-basis-point cuts at each meeting from November through June next year.
In Asia, Taiwanese property and construction stocks fell on Friday following the central bank’s decision to increase the amount of funds banks must hold in reserve to cool the red-hot property market.
Data to be released include Hong Kong inflation and India’s foreign exchange reserves.
In commodities, gold held steady near a record high, while oil was on track for its biggest weekly gain since April following the U.S. rate cut.
Key events of this week:
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Japan to make rate decision on Friday
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Eurozone consumer confidence, Friday
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Canadian retail sales, Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures fell 0.1% as of 12:52 p.m. Tokyo time.
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Nikkei 225 (SBI) futures rose 2%
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Japan’s Topix index rose 1.4%
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Australia’s S&P/ASX 200 index rose 0.4%
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Hong Kong’s Hang Seng rose 1.3%
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The Shanghai Composite fell 0.2%
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Euro Stoxx 50 futures fell 0.2%
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Nasdaq 100 futures fell 0.2%
Coins
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Bloomberg Dollar Spot Index little changed
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The euro remained virtually unchanged at $1.1165.
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The Japanese yen rose 0.3 percent to 142.16 per dollar.
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The offshore yuan rose 0.3% to 7.0453 per dollar.
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The Australian dollar was little changed at $0.6819.
Cryptocurrencies
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Bitcoin rose 0.8% to $63,565.84
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Ether rose 1.1% to $2,493.88
Captivity
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The yield on the 10-year Treasury note was virtually unchanged at 3.71%.
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The yield on Japanese 10-year bonds remained unchanged at 0.850%.
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The yield on Australian 10-year bonds was virtually unchanged at 3.92%.
Raw materials
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West Texas Intermediate crude little changed
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Spot gold rose 0.2% to $2,592.04 an ounce
This story was produced with assistance from Bloomberg Automation.
–With the help of Winnie Hsu.
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