Asian stock markets hit new highs on Friday. Investors gauged US rate cuts for September and the mood was upbeat, while the euro hit a three-week high ahead of French elections.
Sterling held firm at $1.2762 after 14 years of Conservative rule, as Britain’s Labor Party secured a landslide victory in the polls. Elsewhere, the dollar was slightly weaker and Treasuries were slightly higher in Tokyo, as trading resumed after the US Independence Day holiday.
Both Japan’s Nikkei and the broader Topix hit record levels, as did Taiwan’s benchmark, before retreating slightly.
MSCI’s broadest index of Asia-Pacific shares outside Japan hit a two-year high, helped by estimates that Samsung’s second-quarter profit was 15 times higher, helping South Korea’s KOSPI hit a two-year high.
Singapore’s banking and property heavy Straits Times Index retreated after sharp gains lifted it to a two-year high.
“Global liquidity is steady and the S&P (500) is printing ridiculous numbers of records these days… sometimes valuations elsewhere are compelling enough,” said Vishnu Varadhan, chief economist at Mizuho in Singapore.
He noted that artificial intelligence demand was driving chipmaker rallies in Taiwan and South Korea, interest rate settings were fueling record profits for Singapore’s big banks and a weaker yen was a drag on Japanese stocks.
Japanese household spending unexpectedly fell in May, government data showed on Friday, complicating the interest rate outlook, particularly as one of the factors behind the drop was how a weaker yen curbed consumers’ purchasing power.
The yen rose slightly to 160.75 per dollar. FTSE futures rose 0.2 percent on Friday and S&P 500 futures edged ever higher, potentially putting a fresh record for the money index in store later in the day.
Focusing tasks
US employment data headlines Friday’s economic calendar. A slowdown in hiring and little improvement in unemployment are forecast, opening the door to further US tariff cuts.
Markets lifted the probability of a cut in September to 73 percent, down 47 basis points, as the US ISM gauge of services activity at the start of the week fell to its lowest level since mid-2020. year.
The two-year US Treasury yield was at 4.70 percent in Asia and the benchmark 10-year yield rose 1.4 bps to 4.36 percent. A televised interview with Joe Biden also airs in the New York evening, and he will be closely watched as he seeks to get his campaign back on track following a lackluster showing at last week’s presidential debate.
The euro rose to $1.0817 in currency markets as polls indicated France’s far-right National Party did not win an outright majority in Sunday’s parliamentary election vote.
“If the polls ultimately prove accurate, aggressive policies of fiscal expansion and immigration restrictions are unlikely to pass,” said MUFG analyst Michael Vaughan.
The Australian dollar hit a six-month high of $0.6739 as yields turned in its favour, supported by speculators that the next move in Aussie rates could be bullish as inflation remains stubborn.
In commodities trade, gold rose 1.6 percent to $2,363 an ounce on a weaker dollar, its biggest weekly gain in a month. Oil was the most expensive since April, with Brent crude futures holding above $87 a barrel following a bigger-than-expected drop in U.S. crude stocks.
Bitcoin fell 7 percent, below a four-month low of $55,000.
