Asian shares at fresh 7-year high, look past weak US data

 

An index of Asian shares edged away from fresh seven-year highs on Friday but was still on track to score weekly gains, while the dollar languished after lacklustre US economic data made a near-term interest rate hike appear less likely.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped slightly after earlier touching its highest level since January 2008, but was still on track for a weekly gain over 1%.
Hong Kong’s Hang Seng index rose 0.3%, approaching this week’s seven-year highs triggered by inflows from mainland investors. The Shanghai Composite Index was up 2.2%.
Japan’s Nikkei stock average slipped 0.5%, poised for a weekly loss around 0.6%. After breaking the 20,000 level for the first time in 15 years a week ago, the Nikkei has wobbled below it, with investors wary of Japanese corporate earnings reports slated for release from next week.
“Even though investors expect companies to post big profits at the end of the financial year, the Nikkei’s moves may be contained in a small range after companies’ modest guidance,” said Masayuki Kubota, chief strategist at Rakuten Securities.
Wall Street ended with modest losses on Thursday amid worries about upcoming corporate earnings, and after another spate of uninspiring economic data.
US housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economic momentum will probably not be strong enough for the Federal Reserve to decide to start raising interest rates as early as June.
“The report marks more of the same slow and dull picture of health investors have recently become accustomed to for the domestic economy,” Andrew Wilkinson, chief market analyst at US electronic broker Interactive Brokers LLC, said in a note to clients.
Atlanta Federal Reserve Bank president Dennis Lockhart, a voting member of the Fed’s rate-setting committee this year, said the recent “murky” run of US data has him leaning against a June interest rate hike. Lockhart quickly added he was confident the economy will remain on track. Comments from Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren also struck dovish tones.
Fading expectations for a June rate hike pressured the US dollar.
The US unit bought 119.02 yen, nearly flat on the day but well off this week’s high of 120.845.
The euro bought $1.0771, up about 0.1% on the day after climbing as high as $1.0818 on Thursday despite rising concerns about Greece’s financial woes. Greek Prime Minister Alexis Tsipras told Reuters on Thursday he was “firmly optimistic” his government would reach an agreement with its creditors by the end of April despite friction over issues such as pension and labour reform.
The country’s Finance Ministry denied a report by the Financial Times that Athens had approached the International Monetary Fund to request a delay in its loan repayments.
Crude oil prices tumbled in Asian trading, giving back the sharp gains made overnight on news that a tribal group made up of former Al Qaeda militants took control of a major southern oil terminal in Yemen.
Brent crude shed 1% to $63.37 a barrel while US crude gave up 1.1% to $56.07, after both hit 2015 peaks in the previous session, after the Organization of the Petroleum Exporting Countries (OPEC) said its March production surged, adding to a global supply glut.
In other commodities trading, London tin plunged to more than five-year lows, on track for an 11% weekly fall, after giving up nearly a quarter of its value this year on growing supply and slack demand.

World stocks near all-time highs despite Greek drama

Global equities were set for their third straight weekly gain on Friday, hovering near fresh all-time highs as cheap central bank cash kept buoying markets and offset fears that Greece may run out of money as debt repayments loom.
The possibility that Athens might not be able to meet payments to the International Monetary Fund – which could mean default and eventually an exit from the euro zone – has pushed up Greek bond yields but sparked few ripple effects globally.
A US interest rate hike in the near term is now seen as less likely after a recent run of lackluster US economic data that sent the dollar down for a fourth straight day on Friday to near a one-week low.
At the same time, lingering worries about upcoming corporate earnings reports in the United States have been offset by corporate share buybacks, according to analysts and investors.
“The equity market does appear to have looked through the weakness in economic data and earnings with extraordinary aplomb,” said Sean Darby, global equity strategist at Jefferies, in a note to clients.
“(US) share buybacks have become a much more important driver for stock prices in the short-run as earnings-per-share growth wanes.”
The MSCI All-Country World index was up 0.17% at 0846 GMT, near all-time highs hit earlier this week, with European and Asian equities slipping slightly but still near multi-year peaks. The Shanghai Composite Index surged 2.6%, set for a 6% weekly rise.
German 10-year yields hit a new all-time low of 0.073%, creeping closer to zero, even as Greece sounded a mix of defiance and willingness to compromise with its international creditors on reforms required to unlock more loans. Greek yields and shares were slightly higher.
Emerging market stocks hit a new seven-month high and headed for their third consecutive weekly gain, helped by expectations that a US rate hike was further away than once thought.

Dollar heads for worst week in a month on weak US data run

LONDON (Reuters): The dollar fell for a fourth straight day on Friday, coming close to its one-week low, after a run of weak US economic data cast doubt on prospects for a Federal Reserve interest rate rise in coming months.
The latest data showed US housing starts rose less than expected in March and factory activity in the mid-Atlantic region grew modestly this month. That suggests the economy may struggle to rebound from a weak first quarter. The dollar index, which measures the dollar’s performance against a basket of major currencies, traded 0.3% lower at 97.429. It is on track to fall almost 2% this week – its biggest loss in a month.
“The real question for the dollar is: is this just a poor quarter or is this the beginning of a trend of slower data in the States?” said Peter Kinsella, senior FX strategist at Commmerzbank in London.
Benefiting from the dollar’s weakness, the euro has had its best week in a month against the greenback. The single currency has risen almost 2%, despite growing concern that Greece’s debt crisis will lead the country to default and leave the euro zone. It was 0.2% higher on Friday at $1.07865.