Asia stocks build on rally; These are the main moves in markets 

Asia stocks are set to cap the strongest two-week rally since February as investors take in evidence that escalating trade tensions have yet to hurt global growth and China’s moves to support its expansion.

With the world’s expansion intact — as shown in strong Japanese and Korean export figures this week — the narrative of central banks paring back liquidity remains. The Bank of Japan cut its purchases of super-long bonds at an operation Friday, and Hong Kong’s dollar surged the most since 2003, thanks in part to the prospect for higher interest rates there. Japan’s Topix Index closed at the highest since May, and shares climbed from Seoul to Shanghai. Ten-year U.S. yields are holding above 3 percent, though that’s not helping the dollar, which is approaching levels against the yen not seen since January.

The jump in the Hong Kong dollar against the greenback left heads scratching Friday, with the pegged-currency’s move lacking any obvious immediate trigger. Analysts cited a catalog of explanations, from stop losses and upcoming holidays to expectations for higher rates, given that the city boosts borrowing costs in lockstep with the Federal Reserve, which is projected to tighten again next week.

Also buoying risk appetite this week has been a rally in emerging market assets from stocks to currencies, with some investors deciding the recent sell-off left valuations too juicy to ignore. For example, Goldman Sachs Asset Management said this week its buying Turkish and Argentinian government debt.

“Fundamentals in many places are very strong, particularly the U.S.,” Grant Forster, Principal Global Investors’s chief executive officer for Australia, told Bloomberg TV in Sydney. “We don’t expect this to really derail U.S. growth at all,” he said, referring to the trade dispute.

China’s stocks are having their best week since June, though the Shanghai Composite remains in bear-market territory. Premier Li Keqiang this week pledged tax cuts and help for smaller companies to support growth, and the country’s planning agency indicated it would strengthen infrastructure plans.

In Japan, news that the BOJ is trimming purchases of debt maturing in more than 25 years helped boost 20-year and 30-year government bond yields. While the BOJ kept its stimulus policy unchanged earlier this week, the move adds to signs that the easy-money era is ending. Norway’s central bank Thursday hiked rates for the first time in seven years.

The Australian dollar was steady after S&P Global Ratings bumped its outlook for the country’s AAA debt rating to stable from negative. West Texas crude dipped toward $70 a barrel as U.S. President Donald Trump resumed his criticism of OPEC on Twitter. The Organization of Petroleum Exporting Countries and its allies are due to meet in Algiers this weekend.

Meantime, Friday’s U.S. equity session could be lively, with traders bracing for quadruple witching — when futures and options on indexes and individual stocks expire — and the largest revision to the Global Industry Classification Standard since 1999.

These are the main moves in markets:

Stocks

• Japan’s Topix index rose 0.9 percent, bringing this week’s advance to 4.4 percent.
• The Hang Seng Index advanced 1.3 percent as of 2:13 p.m. in Hong Kong.
• The Shanghai Composite Index rose 1.9 percent.
• Australia’s S&P/ASX 200 Index gained 0.4 percent.
• Futures on the U.K.’s FTSE 100 Index added 0.4 percent.
• Futures on the S&P 500 Index rose 0.1 percent after the underlying gauge gained 0.8 percent Thursday, when the Dow Jones Industrial Average rose 1 percent.
• The MSCI Emerging Market Index is on course for a second week of gains.

Currencies

• The yen slid 0.3 percent to 112.79 per dollar.
• The offshore yuan held at 6.8305 per dollar.
• The Hong Kong dollar rose 0.6 percent to 7.7990 per dollar.
• The Bloomberg Dollar Spot Index was flat after dropping 0.4 percent Thursday.
• The euro bought $1.1778.
• The British pound was at $1.3260 after rising 0.9 percent.

Bonds

• The yield on 10-year Treasuries was 3.08 percent, near the highest in more than four months. That’s more than 20 basis points higher than at the start of this month.
• The yield on 30-year Japanese bonds rose about 3 basis points, to 0.89 percent.

Commodities

• The Bloomberg Commodity Index rose 0.1 percent. It’s up 1.8 percent on the week.
• West Texas Intermediate crude gained 0.1 percent to $70.40 a barrel.
• LME copper rose 1.4 percent to $6,169 a metric ton.
• Gold gained 0.1 percent to $1,208.88 an ounce.

Source: Bloomberg – Asia Stocks Build on Rally; Hong Kong Dollar Jumps: Markets Wrap

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