Asia Stocks Mixed on Final Day of Stellar Quarter: Markets Wrap 

• Rand extends loss after South Africa finance minister fired
• Dollar maintains gains after Fed officials adopt hawkish tone

Asian stocks retreated as investors pulled back on the final day of the biggest quarterly advance in five years for the region’s equities. The dollar held gains amid signs of strength in the global economy, while the South African rand tumbled.

A stocks rally in Japan melted away in afternoon trading, despite data showing the first back-to-back increase in the nation’s core consumer prices in more than a year. Chinese equities rose after an official factory gauge climbed to the highest in almost five years, though Hong Kong shares fell. The greenback maintained gains as Federal Reserve officials suggested rates may need to rise faster than the market currently anticipates. The rand extended losses after President Jacob Zuma fired his finance minister.

“The prospect of unpredictable flows in the foreign-exchange, bond and equity markets is high as we head into the last day of the month and more importantly quarter-end,” Chris Weston, chief market strategist at IG Ltd. in Melbourne, said in an email. The fiscal year in Japan ends Friday.

Global stocks have surged this quarter as the reflation trade triggered by Donald Trump’s U.S. election victory shows resilience and stronger global growth underpinned gains. While European central bank officials this week doused expectations that policy makers were planning to withdraw monetary support, Fed officials shifted to a more hawkish tone, as the world’s biggest economy progresses toward goals for full employment and 2 percent inflation.

U.S. government policy may further boost the economy and eventually add fuel to an inflation rate that is already approaching the central bank’s official target, said Federal Reserve Bank of New York President William Dudley. That comes after Fed Bank of Boston President Eric Rosengren argued Wednesday that four hikes in 2017 may be needed to guard against economic overheating, and San Francisco’s John Williams said he “would not rule out more than three increases total for this year.”

What investors are watching:

• A hefty dose of economic data awaits traders Friday, following the morning releases from China and Japan. For Europe, there’s a final reading on U.K. fourth-quarter GDP, and CPI for the euro-zone. Then the U.S. weighs in with personal income and spending.

Here are the main moves in markets:

Stocks

• The MSCI Asia Pacific Index fell 0.6 percent as of 2:12 p.m. in Tokyo. The regional gauge is up 9.4 percent for the quarter, its best showing since March 2012.
• Japan’s Topix fell 0.1 percent, after gaining as much as 0.8 percent earlier. Core consumer prices rose slightly for a second month in February, while separate data showed industrial production grew more than expected during the month.
• The Shanghai Composite Index added 0.3 percent. China’s official factory gaugeclimbed to the highest in almost five years, the latest evidence of gathering momentum in the world’s second-largest economy.
• Hong Kong’s Hang Seng fell 0.5 percent and the Hang Seng China Enterprises Index lost 0.5 percent.
• Australia’s S&P/ASX 200 Index lost 0.5 percent while South Korea’s Kospi was flat. New Zealand’s S&P/NZX 50 added 0.4 percent.
• Futures on the S&P 500 dropped 0.2 percent. The underlying index climbed 0.3 percent on Thursday, and the Stoxx Europe 600 Index gained 0.5 percent to the highest since December 2015.

Currencies

• The rand dropped 2.3 percent, bringing its loss for the week to more than 9 percent. South African President Jacob Zuma fired Finance Minister Pravin Gordhan and replaced him with Home Affairs Minister Malusi Gigaba as he sought to tighten his grip over the nation’s finances.
• The yen slipped 0.1 percent to 112.06 per dollar, after declining 0.8 percent on Thursday. The Bloomberg Dollar Spot Index added 0.1 percent following a 0.4 percent gain in the previous session.
• The euro was flat at $1.0675 after tumbling 0.9 percent Thursday to cap a three-day loss.

Bonds

• Yields on 10-year Treasuries fell less than one basis point to 2.42 percent, after climbing four basis points on Thursday. The rate has alternated between gains and losses throughout the week.
• Australian 10-year yields rose less than one basis point to 2.70 percent.

Commodities

• Crude was lower after a three-day rally sent prices above $50 a barrel. WTI futures fell 0.3 percent to $50.18. Kuwait and other countries support prolonging production cuts that are scheduled to expire in June, the Persian Gulf emirate’s Oil Minister Issam Almarzooq told state-run news agency KUNA.
• Gold was flat at $1,242.61 an ounce, after tumbling 0.9 percent on Thursday.

Source: Bloomberg

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