MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.66%, Japan’s Nikkei was up 0.37%, and Hong Kong’s Hang Seng Index advanced 2%
Asian stocks rose on Friday, on course for a third week of gains, while the dollar was stable as fresh signs of an easing U.S. labour market stoked optimism around interest rate cuts this year ahead of next week’s key inflation data.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.66% and was on course for a nearly 1% gain for the week, its third consecutive week of gains. Japan’s Nikkei was up 0.37%.
China stocks were down, with blue-chip shares 0.28% lower as geopolitical concerns weighed on sentiment following a trade restriction list issued by the Biden administration and potential new China tariff.
Hong Kong’s Hang Seng Index though advanced 2%, having hit an eight-month high in early trading.
Data on Thursday showed U.S. initial claims for state unemployment benefits rose more than expected by 22,000 to a seasonally adjusted 231,000 for the week ended May 4, according to the Labor Department.
The figures follow last week’s report showing U.S. job growth slowed more than expected in April and the rise in annual wages dropped below 4.0% for the first time in around three years.
After a period of remarkable strength and resilience, signs are growing that the U.S. labour market may be starting to soften, according to Ryan Brandham, head of global capital markets, North America at Validus Risk Management.
Markets will be closely watching April U.S. producer price index (PPI) and the consumer price index (CPI) out next week for signs that inflation has resumed its downward trend towards the Fed’s 2% target rate.
Hotter-than-expected inflation reports last month knocked back any lingering expectations of interest rate cuts in the near term, with markets now fully pricing in a rate cut only in November though there remains a possibility of a cut in September.
The dollar index, which measures the U.S. currency versus six rivals, edged up to 105.30.
The yen remains in the spotlight after last week’s suspected rounds of interventions from Japanese authorities totalling around $60 billion aimed at pulling the yen off its 34-year lows of 106.245 per dollar hit on April 29.
On Friday, the yen was last at 155.71 per dollar, with Japan’s Finance Minister Shunichi Suzuki repeating Tokyo’s recent warnings that it was ready to take action against disorderly currency moves.
Ben Bennett, Asia-Pacific investment strategist at Legal & General Investment Management, said the Ministry of Finance wants to avoid spikes in volatility which could negatively impact domestic financial markets.
He added: So like we suspect a few days ago, they will intervene if intraday moves become too large. But I do not think they’ll push against a steady depreciation, like we have seen since.
