Asian shares pulled further away from a five-month high on Friday as a sharp pullback in crude oil prices dampened the risk appetite, though Japanese stocks crawled to a fresh 15-year peak after the dollar surged against the yen overnight.
The dollar’s strength followed upbeat US data, which tilted expectations back toward an early interest rate hike by the Federal Reserve.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3 per cent after advancing to a five-month high on Wednesday.
In a mixed day for the region, South Korean shares fell after a seven-day rally and Malaysian and Thai stocks declined modestly. But shares in Australia and Hong Kong nudged higher.
Tokyo’s Nikkei was up 0.1 per cent after touching a high not seen since June 2000, with strong domestic industrial output data lending support in addition to the weaker yen.
The dollar inched down 0.1 per cent to 119.25 yen after rising about 0.5 per cent overnight from a low of 118.68. The dollar index hovered near a one-month high of 95.357.
Inflation data, durables goods orders
Dollar bulls, disappointed earlier this week by perceived dovish signals from Fed Chair Janet Yellen, took heart again after data released on Thursday showed US core inflation rose more than expected.
Robust US durable goods orders also helped, with both sets of data driving Treasury yields higher and supporting the dollar.
GDP data awaited
Investors are now waiting on revised fourth quarter US gross domestic product data due later on Friday for another health check of the world’s largest economy.
Economists polled by Reuters expected US growth in the fourth quarter to be revised down to 2.1 per cent from a preliminary 2.6 per cent.
“As growth in the upper range of 2 per cent is the Fed’s prerequisite for an early and sustained rate hike, a figure just around or below 2 per cent is likely to hurt expectations for a June hike and weigh on the dollar,’’ said Masafumi Yamamoto, market strategist at Praevidential Strategy in Tokyo.
The euro was up 0.2 per cent at $1.1213, but still near the one-month low of $1.1184 plumbed overnight.
Crude oil
US crude oil posted a modest rebound and was up 1.3 per cent at $48.80 a barrel after plunging 5.5 per cent the previous day as rising US inventories countered expectations for recovering demand.
Despite the sharp overnight slide, US crude was still on track for its first monthly rise in eight. North Sea supply outages and renewed fears of gas supply disruption in Europe have recently supported prices.