Asian shares held firm on Friday on signs global bond markets are stabilising after a big sell-off and sterling jumped about one per cent after UK exit polls forecast the ruling Conservatives taking the most seats in Parliament.
MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed, while Japan’s Nikkei ticked up 0.2 per cent from one-month low hit on Thursday.
Global bond market
Investors breathed a sigh of relief after the global bond market rout since late April appeared to have run its course for now.
Buying of government bonds resumed after yields reached key levels, including 0.8 per cent in German Bunds, 1 per cent in French bonds and 2 per cent for Italian and Spanish bonds.
Europe has been the epicentre of a rout as investors rushed to exit crowded long bond positions built up after the European Central Bank had started quantitative easing in March.
“Yields have risen to levels that would attract investors,’’ said Chotaro Motira, head of Japan rates strategy at SMBC Nikko Securities.
US Treasury yields
Yield on US Treasuries, the benchmark for borrowing costs globally, also ended an eight-session rise, helping to underpin Wall Street and global equity prices.
In addition, strong quarterly results from Alibaba as well as speculation that consumer review website Yelp.com could be for sale drove technology stocks higher.
S&P 500 Index rose 0.38 per cent with the S&P tech index up 0.87 per cent.
US employment report
Many investors now look to the US employment report due later on Friday, with traders expecting non-farm payrolls to recover to gains of 224,000 in April from a shockingly low 126,000 in March.
Another weak reading could deepen worries that the US economy may not be gathering momentum.
In the currency market, the British pound jumped about one per cent to $1.5390 after exit surveys showed Prime Minister David Cameron’s Conservatives may continue to govern Britain.
The polls gave the Conservatives 316 of 650 seats in the Lower House of Parliament, still short of a majority but far better than expected.
The party was seen winning more seats than previous polls had indicated, although it remained shy of securing an outright majority. The opposition Labour party was seen at 239 seats, less than previously expected.
The euro sagged to $1.1251 from a three-month high of $1.1392 hit on Thursday, on a fall in European bond yields and concerns about Greece’s precarious financing situation.
Greece had defied its international creditors on Thursday, refusing to cut pensions or reverse re-hiring some public employees to meet their demands, dimming prospects of progress next week towards securing financial aid.