Asian tech and growth stocks rallied on Friday, following Wall Street's overnight lead, as investors tempered fears about hot inflation and the prospects of an early tapering of stimulus by the Federal Reserve.
Japan’s tech-heavy Nikkei and Taiwan’s stock index stood out in the region – where equities were broadly mixed – with gains of 0.8 per cent and 1.2 per cent respectively.
Chinese blue chips lost 0.8 per cent, however, weighed by financials and capping broader gains in the region.
Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1 per cent, putting it on track for a 1.9 per cent weekly gain. The gauge’s tech components jumped 0.6 per cent over the day.
Futures pointed to a further 0.3 per cent rise for the S&P 500 later in the global day, following a more than 1 per cent rise on Thursday.
Growth stocks led those gains as Treasury yields declined following a weaker-than-expected US business activity reading. A pullback in commodity prices, particularly oil, also undermined the thesis for too-hot inflation.
The Nasdaq Composite was the big winner, soaring 1.8 per cent, while the Dow Jones Industrial Average posted a 0.6 per cent gain.
European stocks looked set to rally at Friday’s open, with Euro Stoxx 50 futures up 0.4 per cent and FTSE futures rising 0.2 per cent.
“It’s still a market trying to work out where inflation is going to go, and what that might mean for Fed policy somewhere down the line,” said Kyle Rodda, a market analyst at IG in Melbourne.
The Philadelphia Federal Reserve Bank said its business activity index fell to 31.5 from 50.2 in April, its highest pace in nearly half a century, casting doubt on how fast the economy can continue to heat up.
Other data on Thursday showed the number of Americans filing new claims for unemployment benefits dropped further below 500,000 last week, but jobless rolls swelled in early May, which could temper expectations for an acceleration in employment growth this month.
The yield on benchmark 10-year Treasury notes held Thursday’s more than 4 basis-point decline to hover around 1.632 per cent in Asia.
Oil prices recovered slightly after steep drops on Thursday, when diplomats said progress was made toward a deal to lift U.S. sanctions on Iran.
Brent crude was 0.3 per cent higher at $65.27 a barrel after slumping 2.3 per cent. West Texas Intermediate crude added 0.4 per cent to $62.21 a barrel following a 2.1 per cent tumble.
In the foreign exchange market, the dollar was languishing near multi-month lows following its steepest slide in about two weeks on Thursday as bets of early US rate hikes pared back.
The dollar index, which measures the greenback against six major peers, was at 89.755, little changed after the previous session’s 0.4 per cent slump. For the week, it has tumbled 0.7 per cent.
In cryptocurrencies, bitcoin traded just below $40,000 on Friday following a wild ride this week that saw it plunge as low as $30,066 on Wednesday for the first time since late January.
The digital token rebounded Thursday after prominent backers such as Ark Invest's Cathie Wood and Tesla's Elon Musk indicated their support.
Wednesday’s brutal selloff was triggered by worries over tighter regulation in China and unease about the extent of leveraged positions among investors.
Number two cryptocurrency ether was trading around $2,900 following a drop to as low as $1,850 on Wednesday.
For the week, bitcoin is down 14 per cent, adding to the previous period’s 20 per cent slide, while ether has fallen 23 per cent. – Reuters
