Asian stocks rebounded from the longest losing streak since May after weaker-than-anticipated U.S. data triggered a delay in investor expectations for a USA interest-rate increase, spurring a rally in risk assets.
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Guinness owner Diageo, worldwide bank HSBC Holdings and British American Tobacco all climbed at least 1.3 per cent, as stocks that earn a high share of their revenues in non-sterling markets rose in trading.
Japan’s Topix index rose 0.3 per cent. Australia’s S&P/ASX 200 Index gained 0.4 per cent.
The Nifty50 reclaimed its crucial resistance level at 8,800 supported by gains in IT, realty, power, oil & gas, capital goods, banks and auto stocks.
Risk aversion in Asian markets today helped the yen firm up although volumes were low as many markets in Asia (such as China, Hong Kong and Malaysia) were shut for a public holiday today.
U.S. August retail sales and manufacturing output fell more than expected, data released Thursday showed.
The US Treasury yield curve steepened to the most in two-and-a-half months as longer-dated debt fell, highlighting expectations that the Fed could wait longer to raise benchmark rates.
Still, the gap between five-year note yields and 30-year bond yields widened to 125 basis points, the steepest curve since July 1.
Futures traders are pricing in a 12 per cent chance of Fed rate hike this month, down from 15 per cent on Wednesday, according to the CME Group’s FedWatch tool.
Real interest rates are far lower now than during bouts of deflation in the past – and that is the message the BOJ should focus on selling, some analysts say, before easing further. Most recently, a plethora of United States economic data was just released on Thursday, mostly worse than expected, which generally did not bode well for the prospects of a USA rate hike by an already skittish Fed.
Wall Street also benefited from a 3.4 per cent jump in Apple shares, after the company said the first batch of its new iPhone 7 Plus sold out globally.
The slight uptick gives a bit more ammunition to Fed hawks who are looking for a reason to raise rates with the core CPI above the central bank’s 2% inflation target.
USA stocks will be taking cues from central bankers more than usual in the coming week as investors await pronouncements from the Federal Reserve and clarification on the Bank of Japan’s easing efforts.
Equities were boosted by a rise in the shares of the United Kingdom companies more reliant on overseas revenue, as the pound weakened after Bank of England officials indicated that another interest rate cut might be on the cards this year. There have been signs that the central bank could stand apart from other policy makers and take action or as other central banks have done this month use verbal intervention to steer markets pushing easing monetary policy announcements for later in the year.
The dollar sank to 101.78 yen at one point Friday in Tokyo, down from 102.10 yen in NY, where is fell from 102.28 yen earlier Thursday in Asia.
The dollar index, which tracks the greenback against a basket of six major peers, remained steady at 95.277, and set to end the week little changed.
Crude for October delivery climbed $0.33 or 0.8 percent to $43.91 a barrel on the New York Mercantile Exchange Thursday.
The BoJ report, and talk of a U.S. rate hike, sent the dollar rallying against the yen.
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Gold was steady after the resurgence in risk appetite pushed it down 0.7 per cent on Thursday.
