HONG KONG, RAW – Asian shares have rallied after two days of losses, but were still in a nervous mood as global investors grapple with how best to interpret central banks’ cautious moves to end stimulus, which also left currency markets quiet.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.47 per cent in early trading on Friday, but is still down about 0.8 per cent compared with last week’s close.

Japan’s Nikkei rose 0.25 per cent, and US stock futures, the S&P 500 e-minis, were flat.

Australia gained 0.4 per cent as mining stocks rose after aluminium prices hit multi-year highs, and Chinese blue chips also advanced 0.5 per cent.

But gains were led by Hong Kong with the local benchmark rebounding 1.5 per cent after falling more than two per cent the day before when Chinese tech stocks took another battering after authorities called gaming firms in for a word. But traders are still cautious about buying too much of the dip.

“At some point in time investors will say actually this is the right price, it’s not going to go to zero,” said John Lau, head of Asian equities and a senior portfolio manager at SEI, referring to Chinese tech names.

“I think most investors will wait until the dust settles and see whether is there is enough clarity before they can act, at this point in time its extremely difficult.”

Asian gains followed a wobbly Thursday when markets had struggled to gain clear direction.

Reaction to the European Central Bank saying in the coming quarter it would slow emergency bond purchases implemented during the COVID-19 pandemic was constrained by the ECB refraining from detailing how it plans to end its 1.85 trillion-euro Pandemic Emergency Purchase Program.

The Dow Jones Industrial Average fell 0.43 per cent, the S&P 500 lost 0.46 per cent, and Nasdaq Composite dropped 0.25 per cent.

Investors usually interpret better employment figures as a sign the Federal Reserve is less likely to delay trimming its massive asset purchases, which have been supporting share prices in recent months.

In addition, Federal Reserve Bank governor Michelle Bowman added her voice to the policymakers who say the weak August jobs report likely will not throw off the central bank’s plan to trim its $US120 billion in monthly bond purchases later this year.

In currency markets, the euro was flat in Asian hours at $US1.1820, after the ECB announcement helped it stem a few days of losses, as it fell off its month high set at the end of last week.

The dollar was also little changed against a basket of peers but on course for nearly a 0.5 per cent weekly rise.

The yield on benchmark 10-year Treasury notes edged up to 1.307 per cent compared with its US close of 1.3 per cent.

US crude dipped 0.1 per cent to $US68 a barrel. Brent crude fell 0.15 per cent to $US71.34 per barrel.