Asian stocks falter on mixed data

Singapore/New York — Asia’s stock markets bounced on Friday after Wall Street’s lead, but were set for their softest week in about a month as investors grapple with tepid economic data and lofty valuations after a huge rally that has wiped out coronavirus losses.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6% on Friday, though it is it poised to snap a four-week winning streak with a small weekly loss.

Japan’s Nikkei edged up 0.3% but was headed for a 1.5% weekly drop, while a bond market sell-off has also moderated in recent days as caution and summertime lassitude weighs on the mood after the S&P 500 touched another record intraday peak.

Another surge in tech stocks took the Nasdaq to a new all-time closing high.

“It’s always going to be a little harder, once that’s happened, to figure out where things are going,” said ING’s head of Asia research, Rob Carnell of the US stock market.

In the absence of a disaster, he said, upward drift is probably the most likely direction, though perhaps with less conviction than the exuberance that has driven world stocks up 50% from March troughs.

“The news is just too mixed at the moment rather than outright catastrophically, apocalyptically bad. And so [investors are] going to keep on cautiously adding and things will carry on going up, and it can go on a long time like that.”

S&P 500 futures rose 0.2%, FTSE futures were steady and European futures were up 0.3%.

Overnight, clouds returned to the US labour market outlook, with weekly jobless claims back over a million to put the total number of Americans on unemployment benefits at 28-million.

The Philadelphia Federal Reserve’s business index also missed expectations and together the weak readings pushed down nominal US yields and dragged on the dollar. Benchmark US 10-year debt yields were last steady at 0.6558%.

Investors are looking ahead to purchasing managers’ index surveys across Europe, Britain and the US — where steady, slightly positive, readings are expected — for the next broad gauge of the recovery’s progress.

Japan’s factory activity fell in August for a 16th month, a private business survey showed, casting doubt over manufacturers’ hopes for a rapid recovery.

Dollar blues

In currency markets, the US dollar seems unable to shake downward pressure.

A bounce in the wake of the release of Federal Reserve minutes that fell short of dovish market expectations wore off fairly quickly and it looks headed for a ninth consecutive weekly loss against a basket of currencies.

Sterling reversed losses against the dollar overnight to sit at $1.3122 and the risk-sensitive Australian dollar again sojourned above $0.72. The euro was steady at $1.1864.

Currency traders are increasingly focused on an address next Thursday by Federal Reserve chair Jerome Powell in case he reveals any details of an expected shift in policy emphasis — especially around inflation — that were absent in the minutes.

The Japanese yen inched up to 105.67 after an inflation miss supported real yields. The Thai baht is tracking for its worst week in a month as investors begin to fret about political unrest.

Elsewhere, and perhaps indicating the low bar for impressing traders, markets interpreted the lack of a US rebuff to a Chinese push for trade talks soon as a positive sign and the yuan hit a seven-month high of 6.8935.

In commodity markets, the prospect of production cuts had oil prices on track for a third straight weekly gain. Brent crude futures were last up 0.4% at $45.06 a barrel and US crude future rose 0.2% to $42.90 a barrel.

Gold was steady at $1,947.66/oz.

Reuters