Asian equities rose, with a rally in Japan offsetting declines in China, as investors weighed economic data and the possible path for interest rates. The yuan extended gains and oil rebounded.
Japan’s Topix advanced after capital spending topped estimates. The Shanghai Composite Index retreated with the Aussie dollar after a private gauge of China’s manufacturing fell below 50. The onshore yuan headed for the biggest four-day advance in almost 12 years amid speculation policy makers are trying to discourage bets against the currency. Crude oil rebounded from a slide triggered by doubts that an OPEC deal extension will be enough to combat higher production.
Global equities ended May just shy of a record as earnings growth supports optimism in the global economy, offsetting concerns for the inflation outlook. Data showed capital spending in Japan topped estimates during the first quarter, while corporate profits jumped 27 percent. In China, the weakness in the Caixin manufacturing gauge — with a smaller sample size — contrasts with the government’s reading Wednesday showing the manufacturing PMI was steady last month.
Federal Reserve Bank of San Francisco President John Williams said in Seoul that if the U.S. economy is strong enough, the central bank can raise interest rates four times in 2017. Policy makers meet in two weeks, while Friday’s jobs report may shed more light on the state of the world’s largest economy.
Meanwhile, four straight months of gains in 10-year Treasuries come as Dallas Fed boss Robert Kaplan said he’s concerned about recent declines in the core measure of inflation. Pacific Investment Management Co. says there’s a 70 percent chance of a U.S. recession in the next five years and investors should consider building cash for when markets eventually correct or overshoot.
In China, propping up the yuan has been a policy priority this year as authorities try to stem capital outflows and prevent financial shocks before an important leadership reshuffle in the ruling Communist Party in late 2017. The currency’s rally, which broke months of calm against the dollar, comes as a rebuke to Moody’s Investors Service, which downgraded China’s sovereign debt rating last week.
Here are some of the key upcoming events:
The U.S. jobs report Friday may bolster the case for a rate hike, with a gain of 180,000 positions expected.
Here are the main moves in markets:
The MSCI Asia Pacific Index increased 0.3 percent as of 2:29 p.m. in Tokyo. The gauge rallied 2.6 percent in May, gaining for a fifth month for the longest winning streak since 2013.
Japan’s Topix index rose 1 percent, after jumping 2.4 percent in May for its biggest monthly gain of the year. Singapore’s Straits Times Index climbed 0.4 percent.
Sydney’s S&P/ASX 200 Index rose 0.1 percent after swinging between gains and losses amid economic releases from Australia and China.
Hong Kong’s Hang Seng Index climbed 0.4 percent after completing its fifth straight monthly gain. The Shanghai Composite Index slipped 0.4 percent, after a four-day rally.
Futures on the S&P 500 added 0.1 percent. The underlying gauge fell 0.1 percent Wednesday, trimming its May gain to 1.2 percent. It closed Friday at a record.
The onshore yuan climbed 0.3 percent. The currency is up 1.4 percent over the latest four days, trading at the highest level since November.
The yen slipped 0.2 percent to 111.01 per dollar, after gaining in the month of May. The Bloomberg Dollar Spot Index was little changed, following a 1.5 percent decline for May for the biggest monthly drop since January.
The Australian dollar dropped 0.4 percent. The currency spiked after retail sales were stronger than expected, but reversed gains on China’s manufacturing data.
The pound fell 0.2 percent to $1.2865. The latest Times/YouGov poll showed the Conservatives leading Labour by just three points.
West Texas Intermediate crude oil advanced 0.8 percent to $48.68 a barrel, rebounding from a 2.7 percent drop in the previous session.
Gold dropped 0.2 percent to $1,266.70 an ounce, giving back some of Wednesday’s 0.5 percent gain.
The yield on 10-year Treasuries rose less than one basis point to 2.21 percent, after falling a similar amount on Wednesday.
Benchmark yields in Australia dropped two basis points to 2.38 percent.