Asian stock markets showed a mixed recovery on Friday as investors weighed potential policy moves by major central banks, following renewed inflation concerns sparked by an unexpected rise in U.S. producer prices.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.14 percent after Thursday’s Bureau of Labor Statistics report revealed that the Producer Price Index climbed 0.9 percent month-on-month in July, well above forecasts. The report led traders to temper expectations for how aggressively the Federal Reserve can cut rates in September without fueling additional inflation.
Traders are currently pricing in a 92.1 percent chance of a 25 basis point reduction at its meeting next month, compared with a 100 percent chance of a cut on Thursday, according to the CME Group’s FedWatch tool. The prospects of an outsized 50 basis point cut fell to zero from an earlier expectation of 5.7 percent a day ago.
Nikkei 225 gains 1.65 percent after major sell-off
The Nikkei 225 bounced back 1.65 percent to near a new record high after Thursday’s sell-off, which was the index’s largest drop since April 11 and ended a six-day winning streak. Friday’s Japanese GDP data showed the economy grew at an annualized rate of 1 percent in the April–June quarter, exceeding analyst expectations. The dollar also weakened 0.5 percent against the yen, trading at 147.09.
In the U.S. stock market, futures were up 0.2 percent in early trading and were on track for a fourth day of gains after a volatile trading session on Wall Street on Thursday.
Dollar falls on strong PPI data
The dollar index, which measures the greenback against a basket of major trading partner currencies, lost some gains following the PPI data release, and was last down 0.2 percent at 98.026.
Australian shares rose 0.7 percent, while Hong Kong’s Hang Seng Index fell 1.05 percent. The CSI 300 gained 0.72 percent after weaker-than-expected Chinese economic data for July, including retail sales and industrial production, fueled speculation of new stimulus measures. Markets in India and South Korea remained closed for public holidays.
In the European stock market, the EURO STOXX 50 was up 0.86 percent, Germany’s DAX futures gained 0.56 percent and FTSE futures rose 0.01 percent.
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Cryptocurrency market steadies
The cryptocurrency market steadied after Bitcoin briefly hit a record of $124,480.82 on Thursday, but quickly retreated after failing to reach its next key target. The currency was last up 0.8 percent, regaining some ground, while Ether rose 1.7 percent. Bitcoin’s inability to break the $125,000 resistance points to another consolidation phase.
In commodities, Brent crude slipped 0.3 percent to $66.63 per barrel ahead of a meeting in Alaska between U.S. President Donald Trump and Russian President Vladimir Putin. Meanwhile, spot gold was up 0.17 percent to $3,343.65.
