Euro off highs, China shares swing to new peak
Asian shares were mostly lower on Friday while bonds snapped a vicious losing streak and the euro retreated as investors braced for U.S. jobs data and another day of drama over Greece.
The main exception was China where stocks reached new highs after a week of roller-coaster action. Shanghai .SSEC added 1 percent to clear the 5,000 barrier for the first time since early 2008, while the CSI300 .CSI300 gained 1.1 percent.
Elsewhere, the mood was subdued with MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down a slim 0.2 percent. Japan’s Nikkei 225 .N225 dipped 0.5 percent, while shares in South Korea .KS11 lost 0.4 percent.
In the latest Greek twist, Athens delayed a debt payment to the IMF and instead chose to bundle four payments into a single 1.6 billion euro lump sum which is now due on June 30.
Greek Prime Minister Alexis Tsipras will put creditors’ proposals to parliament from 1500 GMT on Friday, but he has already dubbed the plan “extreme”.
Before that likely contentious meeting gets underway, markets are bracing for the latest reading on U.S. jobs. Median forecasts in a Reuters poll are for payrolls to rise 225,000 with the jobless rate steady at 5.4 percent. ECONUS
Yet markets only imply a one-in-three chance of a lift off in Fed funds by September, and are not fully priced for a move until December.
“That September is seen as the first possible tightening by the Fed and there are two meetings before then, detracts significantly from the sensitivity to the data,” says Alan Ruskin, head of forex at Deutsche
“It would probably need a payroll number either side of 150,000 or 250,000 to get the market really excited whereby Fed expectations/probabilities start to change materially.”
Caution ahead of the report kept Wall Street on the defensive. The Dow .DJI ended Thursday down 0.94 percent, while the S&P 500 .SPX lost 0.86 percent and the Nasdaq .IXIC 0.79 percent.
Declining oil and gold prices also weighed on energy and materials shares, which led declines in the S&P 500.
Global bond yields swung wildly for a third straight session, but did at least end well below their highs. Yields on 10-year German bunds DE10YT=TWEB got as far as 0.996 percent at one stage before rallying all the way to 0.83 percent.
On Friday, 10-year Treasury yields US10YT=RR were hovering around 2.33 percent having been as high as 2.425 percent.
Treasuries had got a boost when the IMF downgraded its outlook for the U.S. economy and took the unusual step of cautioning the Fed to wait until the first half of 2016 to start raising interest rates.
Currencies were equally whipsawed, with the euro spiking to $1.1380 EUR= at one stage before recoiling to $1.1201 in Asian trading. The single currency also lapsed to 139.42 yen EURJPY= from a five-month peak of 141.06.
The dollar held at 124.46 yen JPY= having bounced between 123.76 and 124.68 in the past couple of sessions. The dollar index, which measures it against a basket of six major currencies, was up 0.3 percent at 95.714 .DXY.
In commodity markets, oil was under pressures ahead of an OPEC meeting that is expected to affirm an output target of 30 million barrels per day, ignoring calls from some producers to cut supply and support prices.
Brent crude LCOc1 edged up 5 cents to $62.09 a barrel, while U.S. crude futures CLc1 eased 5 cents to $57.95.
Source: Reuters – Euro off highs, China shares swing to new peak
