TOKYO (Reuters) – Global equities rallied on Friday, and Asian equities rebounded from a three-month low as investors focused more on optimism about the global economic recovery than rising tensions between the West and China. .
European stocks appear poised to open higher, with Euro Stoxx futures up 0.8% and Britain’s FTSE futures gaining 0.61%.
The MSCI ex Japan Asia Index rose 1.43% after hitting a nearly three-month low on Thursday, as the Shanghai Composite Index gained 1.53%, snapping a three-day losing streak.
On Thursday, Chinese stocks fell near a three-month low earlier in the month. The European Union joined Washington allies this week in imposing sanctions on officials in China’s Xinjiang region for allegations of human rights abuses, prompting retaliatory sanctions from Beijing.
“All the sanctions so far have been largely symbolic and should have little economic impact. But the Sino-US confrontation is hurting market sentiment. It could take some time for them to reach a compromise, ”said Yasutada Suzuki, head of emerging markets investment at Sumitomo Mitsui Bank.
Japan’s Nikkei rose 1.47% after Wall Street stocks rallied, driven by cheap, cyclical stocks that have been hit by the pandemic.
The Dow Jones Industrial Average was up 0.62% and the S&P 500 gained 0.52%, while the Nasdaq Composite added just 0.12%.
“It’s the end of the month, the end of the quarter and for Japanese players, the end of the financial year, so we’re seeing random flows from all kinds of players,” said Masanari Takada, cross-asset strategist at Nomura Securities.
“But generally speaking, those who were leading the reflation trade based on their positive view of the Chinese economy are now closing their positions, while those who failed to ride that wave are looking to see if they should buy on the dips.”
While markets were driven more by various end-of-quarter trading than news flow, analysts noted that overnight headlines were mostly supportive of equities.
Data from the US Department of Labor showed that claims for unemployment benefits fell to a one-year low last week, a sign that the US economy is on the verge of stronger growth at measure that improves the public health situation.
In his first formal press conference, United States President Joe Biden said he would double down on his administration’s vaccine implementation plan after hitting the previous goal of 100 million injections 42 days ahead of schedule.
But while the improvement in the US health crisis has bolstered risk appetite globally, investors are increasingly alarmed by the divergence in health conditions.
“Vaccination in continental Europe is being delayed. In relation to the United States, economic reopening is likely to be delayed as some countries are forced to impose lockdowns, “said Soichiro Matsumoto, Japan’s chief investment officer at Credit Suisse’s private banking unit in Tokyo.
That put pressure on the euro, which licked its wounds at $ 1.1782 after falling to $ 1.1762 overnight, its lowest levels since November.
The dollar also rose to 109.21 yen, a surprising distance from last week’s nine-month high of 109.365 yen.
The US currency index was near its highest level since mid-November, having gained 2.0% so far this month.
Oil prices recovered a bit from a 4% drop on Thursday, though they are on track for their third consecutive week of losses on concerns about a further reduction in demand. [O/R]
In addition to Europe, major developing economies like Brazil and India are also struggling with a resurgence in COVID-19 cases.
The market still received some support from concerns about supply disruption, as a container ship stranded in the Suez Canal can block the vital transport route for weeks.
US crude rose for the last time 1.33% to $ 59.35 a barrel and Brent was at $ 62.62, up 1.08%.
Additional information from Katanga Johnson in Washington; Edited by Richard Pullin, Ana Nicolaci da Costa and Lincoln Feast.