MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent from a two-month high, but still 3.1 per cent higher so far for the week in its best performance since July
Asian shares took a breather on Friday as softer U.S. economic data took some of the steam out of Wall Street, but also bolstered bonds in a big way while slugging oil prices in a boost for the inflation outlook.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent from a two-month high, but still 3.1 per cent higher so far for the week in its best performance since July.
Both Brent and U.S. crude slipped around 5 per cent on Thursday to four-month lows in a move that was blamed on economic and supply concerns, though technical selling likely played a part when the $80 level broke.
Dealers suspected algorithmic and trend-following funds drove the speculative sell off with much of the losses coming in just a single hour of trade.
Brent was last 10 cents lower at $77.36 a barrel, and a world away from the $97.69 top reached in late September, while U.S. crude eased 7 cents to $72.83.
However, the rout should put added downward pressure on consumer prices across the globe and reinforce expectations of policy easing in 2024.
Adding to the disinflationary theme was commentary from Walmart executives that costs were “more in check” and they were planning on cutting prices for the holiday season.
Equity investors were not as impressed with the idea of margin compression and knocked Walmart shares down 8 per cent, while a decline in energy stocks dragged on the S&P 500.
Early Friday, S&P 500 futures were all but flat, as were Nasdaq futures. EUROSTOXX 50 futures added 0.3 per cent and FTSE futures 0.2 per cent.
Japan’s Nikkei gained 0.2 per cent, to be 2.8 per cent stronger for the week, helped by reassurance from the BoJ that it was sticking with its super loose policy.
Chinese blue chips were a fraction lower, having missed on the general rally so far this week.
Sentiment in Asia was supported by the apparent easing of tensions between the US and China, with the Chinese press lauding the meeting between President Xi Jinping and President Joe Biden.