Asian shares looked set on Friday to post their strongest week in five months as global investors returned to riskier assets after a string of positive US economic data and a bounce in oil and commodity prices.
The rebound could continue if the February US employment report later in the session shows job gains but remains weak enough to discourage rate increases in the near term.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent to the highest in almost two months. That put in on track for a 5.4 per cent gain for the week, its strongest weekly performance since October.
Japan’s Nikkei was little changed on the day but poised for a weekly gain of 4.7 per cent.
“Globally, markets are rolling back the extreme risk-off trading they did in January and February,’’ said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “Part of the reason is that the Fed seems to be easing its insistence on raising rates.’’
Chinese shares
Chinese shares, however, failed to gain from the optimism, with the Shanghai Composite index down 0.5 per cent, while the CSI 300 was little changed. Investors are awaiting the start of the annual meeting of China’s parliament on Saturday, which will map out economic goals for the next five years.
The MSCI World equity index covering 46 markets held near its two-month high touched on Thursday.
Emerging markets
The rally was led by emerging markets, with a measure of emerging markets shares rising 0.4 per cent on Friday for a sixth day of gains, its longest winning streak since October.
The biggest move on Thursday came from Brazil’s Bovespa index, which rose more than 5 per cent, its biggest gain in six years, on news that President Dilma Rousseff could be implicated in a sweeping corruption scandal.
That encouraged investors who blame her administration’s policies for driving Brazil into deep recession.
On Wall Street, the S&P 500 Index rose 0.35 per cent to a two-month high of 1,993.4.
US service sector index
US data on Thursday was positive on the whole, with factory orders rising and the service sector index showing continued expansion.
Somewhat dimming the optimism, however, the services survey showed employment in the sector fell in February for the first time in two years.
But that was not necessarily bad for US stocks, as it helped to reduce expectations for a rate hike this month by the Federal Reserve, and pushed the dollar lower.
Dollar index
The dollar index against a basket of six major currencies slipped 0.6 per cent on Thursday. It pared some of those losses to trade up 0.1 per cent at 97.712 on Friday.
The dollar’s weakness helped push gold to a 13-month high of $1,268.30 per ounce on Thursday. The precious metal was last trading at 1,259.50.
The euro jumped back to $1.0938 from Wednesday’s one-month low of $1.08255.
The yen traded at 113.61 to the dollar, recovering from Wednesday’s two-week low of 114.56.
Australian dollar
The Australian dollar stood at $0.7364, holding near a three-month high of $0.7374 hit on Thursday, helped by rising iron ore prices. It's on track for a weekly gain of 3.2 percent, the most in five months.
Spot iron ore for immediate delivery to China’s Tianjin port hit a 4-1/2-month high on Thursday.
Commodity prices
Commodity prices have been on the mend, with oil recovering more than 30 per cent from January’s 12-year lows, helped by hopes of measures to ease global glut.
Brent futures touched a two-month high of $37.40 per barrel this week. They were last trading at $37.20, on track for a gain of 6 per cent this week.
US crude futures have risen 6.2 per cent this week to $34.80.