HONG KONG, RAW – Asian shares have snapped two days of losses, climbing as investors wait to see whether jobs data will reinforce the need for faster US interest-rate hikes.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent, boosted by a 1.2 per cent gain in the Australian benchmark where bank stocks were to the fore, though Japan’s Nikkei gave up early gains to slip 0.66 per cent.
Nasdaq futures rose as much as 0.5 per cent in earlier Asian trading before giving up some gains to trade 0.25 per cent higher, and S&P 500 e-mini stock futures advanced 0.17 per cent.
A key market driver this week has been the rise in US yields following the publishing of the Federal Reserve’s December minutes, Kerry Craig global market strategist at JPMorgan Asset Management, said.
The minutes, published on Wednesday, had shown that a tight jobs market and unrelenting inflation could force the US central bank to raise rates more aggressively this year.
“Though we saw yields come off a little at the end of the session, share futures ticked up, and now we’re seeing that at the Asia open too,” Craig said.
The yield on benchmark 10-year Treasury notes was last at 1.7211 per cent having reached 1.7530 per cent overnight, its highest since April 2021, up sharply from its 2021 close of 1.5118 per cent.
The two-year yield, which is closely linked to inflation expectations, was at 0.8656 per cent just off the overnight high of 0.886 per cent.
JPMorgan’s Craig said investors were waiting for US non-farm payroll data due later on Friday, and inflation data due next week, to see whether they would reinforce or undermine the case for faster rate hikes in the US
The higher yields have hurt tech shares this week as investors rotated into shares of companies that do well in a higher-rate environment, like banks.
MSCI’s Asian benchmark, which gives significant weight to several large tech names, is off 1.1 per cent this week, though tech stocks did manage to rally on Friday, notably South Korea’s Samsung.
Samsung stock rose 1.4 per cent after the company reported its best quarterly operating profit in four years.
Overnight, US shares had slipped slightly along with the rising yields, but losses were muted compared to sharper falls earlier in the week.
In currency markets, higher yields meant the US dollar index, which measures the greenback against six peers, has risen 0.63 per cent this week.
On Friday, the greenback held its gains against most majors while advancing 0.1 per cent on the yen which was at 115.94 per US dollar, in sight of Tuesday’s five-year high of 116.34.
Oil prices rallied, which some analysts linked to news that Russian paratroopers had arrived to quell unrest in Kazakhstan, though production in the OPEC+ producer country remains largely unaffected so far.
Brent crude futures rose 0.6 per cent to $US82.48 a barrel, and US crude rose 0.6 per cent to $US79.96.
Spot gold rose 0.15 per cent at $US1,791.85 an ounce after touching a two-week low of $US1,788.25 on Thursday, as rising US Treasury yields hurt demand for the non-interest bearing metal.