Dollar in best week since 2016; Asian stocks traded mixed Friday 

Asian stocks traded mixed Friday as plans for U.S. tariffs on Chinese imports revived concerns about global trade growth. The dollar extended gains, heading for its best week since 2016 after the Federal Reserve signaled further tightening in 2018 while the European Central Bank indicated it won’t raise interest rates for more than a year.

Equities edged higher in Japan, rose in Australia, were flat in Hong Kong and dipped in South Korea and China. The yen briefly slipped after the Bank of Japan downgraded its assessment of inflation. The S&P 500 Index closed with a modest rise overnight. European stocks and bonds jumped, and the euro fell, after the ECB delivered a somewhat dovish message to investors. Emerging markets are under pressure as worries about an overhaul of Argentina’s central bank leadership saw a plunge in its currency.

Concluding what’s been an event-packed week for global markets, the BOJ left monetary policy unchanged and lowered its assessment of inflation after raising it in January. Governor Haruhiko Kuroda is likely to be pressed in a news conference on recent cutbacks in bond purchases as Japan’s central bank falls further behind its global peers that are moving ahead with policy normalization.

ECB President Mario Draghi succeeded Thursday in announcing the phasing out of quantitative easing without roiling markets. Prospects for no rate hike until the second half of 2019 saw the euro tumble at one point the most since 2016. A day earlier, Fed Chairman Jerome Powell said that with the U.S. economy in “great” shape, American policy makers will continue with gradual rate increases. Fed officials indicated that they’ll raise their benchmark a total of four times this year.

Still to come Friday is an expected official announcement on President Donald Trump’s list of $50 billion of Chinese imports targeted for higher tariffs, a move that China has said it will respond to in kind. China had threatened to abandon commitments made in bilateral talks so far if Trump went ahead with tariffs.

Elsewhere, oil headed for a weekly gain as a halting of oil loading from two key ports in Libya offset concerns about a phase-out of supply limits by OPEC and allied producers.

These are some key events to watch this week:

• The Bank of Japan June monetary policy decision and news conference is Friday.

And these are the main moves in markets:

Stocks

• The MSCI Asia Pacific Index fell 0.2 percent as of 12:25 p.m. Tokyo time.
• Topix index rose 0.3 percent.
• Hong Kong’s Hang Seng Index rose 0.1 percent.
• Kospi index fell 0.4 percent.
• Australia’s S&P/ASX 200 Index gained 1.3 percent.
• Futures on the S&P 500 Index fell 0.1 percent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 percent.
• The Japanese yen fell 0.1 percent to 110.71 per dollar.
• The euro fell less than 0.05 percent to $1.1565.

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.93 percent.
• Japan’s 10-year yield fell less than one basis point to 0.035 percent.
• Australia’s 10-year yield fell three basis points to 2.696 percent.

Commodities

• West Texas Intermediate crude rose less than 0.05 percent to $66.92 a barrel.
• Gold rose less than 0.05 percent to $1,302.38 an ounce.
• LME copper fell 0.3 percent to $7,152.50 per metric ton.

Source: Bloomberg – Asia Stocks Mixed; Dollar in Best Week Since 2016: Markets Wrap

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