Investors continued to step away from Asian equities at the end of the week even as a global pullback in other reflation trades eased.
Equities from Sydney to Tokyo fell, while China stocks traded in Hong Kong pared a weekly gain. Treasuries resumed losses after rising for the first time in six days on Thursday, while the dollar was little changed after the biggest drop in two weeks. Investors pulled back from reflation trades on Thursday after a rekindling of the trend fueled by optimism that the U.S. economy can withstand higher interest rates.
Traders have gone back and forth assessing the prospects for President Donald Trump’s economics plans and the timing of U.S. interest-rate increases. Trump’s plans last week to unveil a “phenomenal” tax policy spurred a rally in stocks, the dollar and emerging-market assets. Signs the gains were too furious emerged, with the relative strength index of the MSCI’s broadest global equity gauge signaling to some traders a correction is due, while odds for a U.S. rate hike in March remain well under 50 percent even after an increase this week.
Stanley Fischer, the Federal Reserve vice chairman, said the U.S. economy is close to fulfilling the central bank’s employment and inflation goals, signaling the Fed could increase rates three times this year. His views echoed Janet Yellen’s comments to Congress this week. Incoming data bears him out: January housing starts beat expectations, the Philadelphia Fed manufacturing index soared to the highest since 1984, and jobless claims reflected a vibrant labor market.
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What’s coming up:
U.K. retail sales data for January is due, ahead of the Conference Board’s U.S. Leading Index. U.S. tractor-maker Deere & Co. is among the companies reporting earnings.
Here are the main moves in markets:
The MSCI Asia Pacific Index lost 0.3 percent as of 3:10 p.m. in Tokyo, after closing Thursday at the highest level since July 2015. Japan’s Topix declined 0.4 percent, ending slightly lower for the week. The Hang Seng China Enterprises Index tumbled 1.1 percent as banks snapped a winning streak. Hong Kong’s Hang Seng Index slipped 0.5 percent from the highest closing level since August 2015. Singapore’s Straits Times Index rose 0.4 percent as data showed the economy grew at the fastest pace in more than five years in the fourth quarter. India’s Sensex jumped to the highest since September after HDFC Bank Ltd. reached a record as the central bank lifted a ban preventing overseas investors from buying the shares. Futures on the S&P 500 Index were little changed after the benchmark gauge fell for the first time in eight days, halting the longest rally since 2013. In European trading Thursday, the Stoxx Europe 600 Index fell 0.4 percent, also the first decline since Feb. 6.
The yen slipped 0.1 percent to 113.39 per dollar, after rising 0.8 percent on Thursday. The Bloomberg Dollar Spot Index was little changed, after dropping 0.3 percent in the previous session.
The yield on 10-year Treasuries rose one basis point to 2.46 percent. It dropped five basis points on Thursday after increasing 16 basis points in the prior five days. Australian 10-year yields rose for a sixth day, adding less than one basis point to 2.80 percent.
Oil advanced 0.1 percent $53.43 a barrel. Crude is heading for its first weekly decline in five weeks as expanding U.S. crude stockpiles countered output cuts from OPEC and other producing nations. Gold declined 0.1 percent to $1,238.03 an ounce after climbing for three days. The metal is trading close to a three-month high, and is set for its seventh weekly gain in eight weeks. (dan)