Asian Stocks Waver, U.S. Growth Calms Nerves
January 31, 2014 2:53 PM EST
Asian stocks struggled to push higher on Friday, but did get some momentum from data showing strong U.S. growth and calming emerging market nerves after several days of turmoil.
Asian Shares Fall on Fed Tapering Uncertainty
With several countries, including Hong Kong and Singapore, observing the Lunar New Year holiday, volume across the region was expected to be lighter than usual.
S&P 500 e-mini futures climbed about 0.2 percent, after the S&P 500, the Dow Jones industrial average and the Nasdaq Composite all ended with solid gains on Thursday.
But MSCI's broadest index of Asia-Pacific shares outside Japan was wavering between positive and negative territory.
Japan's Nikkei stock average outperformed the region, adding 0.5 percent after economic data suggested the government and Bank of Japan are making progress toward their goal of sparking sustainable growth and defeating deflation.
Japan's core consumer inflation rose at the fastest pace in more than five years in December, the job market improved, and factory output grew.
But for investors the upbeat data also had its downside: "I think the BOJ is unlikely to adopt additional easing because there is no reason to justify it, given the positive macro-economic environment," said Junko Nishioka, chief economist at RBS Securities.
Investors took heart from Thursday's data showing U.S. gross domestic product grew at a 3.2 percent annualised pace in the fourth quarter of 2013, to round out the biggest half-year increase since 2003.
"Of course, there are always areas of concern and pockets of weakness with fixed residential investment declining and overall growth slowing but in general, the data was positive for the dollar," Kathy Lien, managing director at BK Asset Management, said in a note to clients.
The U.S. dollar index was slightly higher on the day at 81.077 after touching a one-week high against a basket of major currencies Thursday, rising as far as 81.135 from a session low of 80.545.
The dollar was nearly flat against the euro at $1.3555, and gained about 0.1 percent against the yen to 102.76 yen, moving away from a seven-week low of 101.77 yen hit on Monday.
The euro added about 0.1 percent against the yen to 139.29 yen, moving away from an eight-week low of 138.85 yen touched on Thursday.
The upbeat U.S. growth data helped calm markets roiled by anxiety over emerging economies.
The Fed decided this week to stay the course on its stimulus withdrawal and reduced its bond purchases for a second time, to $65 billion per month from $75 billion as expected, reviving perennial concerns that capital will flow out of emerging markets.
Several emerging market central banks, including Turkey, South Africa and India, implemented extraordinary interest rate hikes this week in an effort to stem selling of their currencies. Russia's central bank pledged unlimited foreign exchange intervention if the rouble strays outside its target band.
On the commodities front, the higher dollar pressured gold, which looked poised to post its first weekly drop in six weeks. Spot gold slipped slightly to $1,242.19 an ounce on the heels of a 2-percent overnight fall.
The stronger greenback also weighed on U.S. crude futures, although upbeat growth data provided some support. U.S. oil edged lower to $98.19 a barrel.