Mumbai, 9 Aug (Commoditiescontrol): Asian markets closed the week on a positive note, with Japanese stocks recovering most of their early-week losses, while the yen weakened as investors scaled back expectations of an aggressive U.S. interest rate cut. Japan's Nikkei surged 1.7% on Friday, following a strong rebound on Wall Street. The index has nearly erased a 13% plunge from Monday, ending the week with a modest 1.5% decline.
The MSCI Asia-Pacific index, excluding Japan, also climbed 1.4%, reversing Thursday’s losses, though it ended the week down 0.3%. The positive sentiment was bolstered by U.S. jobless claims data, which showed a larger-than-expected drop, easing concerns about a deteriorating labor market and reducing the likelihood of a half-point rate cut by the Federal Reserve in September from 69% to 54%.
The rebound in global markets followed a sharp sell-off earlier in the week triggered by fears of a U.S. recession after last week’s jobs report. However, investors have since bought into the dip, with the Nasdaq rising 3% and the S&P 500 up 2.3% overnight.
Adding to the optimism, Chinese data revealed that consumer inflation rose 0.5% in July, surpassing forecasts of a 0.3% increase, reducing fears of deflation in the world's second-largest economy. In response, Chinese blue-chip stocks gained 0.5%, and Hong Kong's Hang Seng index jumped 1.4%.
Federal Reserve officials, including Kansas City Fed President Jeff Schmid, expressed growing confidence that inflation is cooling sufficiently to allow for future rate cuts. Schmid, known for his hawkish stance, noted that while the economy remains resilient, rate adjustments could be appropriate if inflation continues to decline.
The U.S. dollar strengthened for a fourth consecutive day, reaching 147.35 yen, on track for a 0.6% weekly gain despite a steep 1.5% drop on Monday. Earlier in the week, the yen had gained following a surprise rate hike by the Bank of Japan, which disrupted the carry trade, but the BOJ's reassurance of stable rates helped stabilize the currency.
Bond yields rose as demand for safe havens diminished, with U.S. 10-year yields holding at 3.9781%, significantly above Monday’s low of 3.667%. Two-year yields increased by 15 basis points to 4.0193% for the week.
In commodities, crude oil prices slipped slightly on Friday but remained on track for significant weekly gains amid supply fears related to escalating tensions in the Middle East. Brent crude futures dipped 0.2% to $78.97 a barrel, while U.S. West Texas Intermediate crude also fell 0.2% to $76.03, with both benchmarks up over 3% for the week. Gold prices eased 0.1% to $2,424.26 per ounce.
(By Commoditiescontrol Bureau: 09820130172)
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