Japan’s Nikkei index closed at an almost two-month high on Friday on what was a thin day of trading across Asia.
Hong Kong’s Hang Seng and China’s mainland markets were closed for public holidays but Tokyo’s main index was boosted by gains in shares of Fast Retailing after it reported robust domestic sales.
The Nikkei share average rose 1.27%, its highest closing level since April 5, and posted its biggest weekly jump since March 25. But caution ahead of a key US jobs report due later in the day capped overall gains.
The broader Topix gained 0.35% 1,933.14 and advanced 2.43% for the week.
Elsewhere across the region, shares in Seoul rose as South Korea released data showing its consumer price index rose 5.4% in May from a year ago on a global surge in materials and food costs, beating the 5.1% growth estimated in a Reuters poll and cementing the case for further rate hikes.
Indian stocks fell with Mumbai’s signature Nifty 50 index down 0.26%, or 43.70 points, to close at 16,584.30.
Australia’s resource-heavy ASX 200 finished higher by 0.88% but markets in Taiwan and Thailand were also closed, thinning trading volumes across Asia.
Globally, European shares were mostly higher on Friday as investors await the key jobs report that will help gauge the strength of the US economy and provide hints on the pace of the Federal Reserve’s policy tightening in the second half of the year.
MSCI’s world equity index, which tracks shares in 50 countries, was up 0.17% and on track for its second consecutive weekly gain after seven weeks of losses.
US Employment Report
Investors are looking ahead to the US Labor Department’s comprehensive employment report, due at 1230 GMT, for any hints of a slowdown in the jobs market, which might give the Fed an option to slow or even pause interest rate hikes in the second half of the year.
“Employment will matter more in the coming months because income and job security will matter more,” UBS GWM Chief Economist Paul Donovan said. “As demand normalises, whether firms start firing workers will matter to the balance of consumer spending and saving.”
Euro zone inflation rose to another record high in May, which markets see as a challenge to the European Central Bank’s view that gradual rate increases will be enough to tame fast price growth.
Interest Rate Hikes Priced In
Money markets have now fully priced in a 25 basis point interest rate hike from the ECB at its July meeting, with around 124 basis points of tightening priced by the year-end, equivalent to almost five 25 basis point increases.
Markets have also locked in consecutive 50 basis point Fed hikes in June and July, but there remains uncertainty about what happens after that.
The US dollar edged lower as traders await the US jobs report. The dollar index, which measures the greenback against a basket of six major currencies, was lower by 0.08% at 101.68.
Oil prices declined as markets adjust to the decision by oil-producing countries OPEC+ to boost production.
Tokyo – Nikkei 225 > UP 1.27% at 27,761.57 (close)
Hong Kong – Hang Seng Index > closed
Shanghai – Composite > closed
New York – Dow > UP 1.33% at 33,248.28 (Thursday close)
- Reuters with additional editing by Sean O’Meara