SINGAPORE: Asian stocks surged to their highest in 15 months on Friday led by tech and Hong Kong stocks, while the yen put more distance from recent 34-year lows to cap a tumultuous week that saw suspected intervention from Japanese authorities.
With markets in Japan and mainland China closed on Friday, regional trading activity is likely to be subdued as traders look ahead to the U.S. nonfarm payrolls data later in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan, opens new tab surged to 550.49, its highest since February 2023 and was last up 1% at 547.72.
Hong Kong’s Hang Seng Index, opens new tab rose 1%, on track for a ninth consecutive day of gains and on its the longest winning streak since January 2018.
European bourses are also set for a higher open, with Eurostoxx 50 futures up 0.25%, German DAX futures 0.24% higher and FTSE futures up 0.15%.
The spotlight for much of this week has been on the yen, which strengthened 0.43% to 152.99 per dollar on Friday, having started the week by touching a 34-year low of 160.245 on Monday.
In between, traders suspect the authorities stepped in on at least two days this week and data from the BOJ suggests Japanese officials may have spent roughly $60 billion to defend the beleaguered yen, leaving trading desks across the globe on high alert foe further moves by Tokyo.
A series of Japanese public holidays as well as Monday’s holiday in the UK - the world’s biggest FX trading centre - could present a possible window for further intervention by Tokyo. Japanese markets are also closed on Monday.
Asia stocks rise as Fed tamps down hike fears; yen leaps
The yen has weakened for over a decade, largely due to low Japanese interest rates drawing funds out of the country towards higher yielding assets in other large economies including the United States. Despite the sizable bounce in the yen this week, it is still down 8% against the dollar this year.
While there have been two bouts of suspected MOF interventions, another $20 billion of yen buying on Friday would really scare off the yen shorts and get dollar/yen below 150, Chris Weston, head of research at Pepperstone, said in a note.
“Good things come in threes, and while another bout of intervention seems unlikely, the MOF/BOJ could turn momentum trader and shake things up one last time ahead of nonfarm payrolls.”
The dollar index, which measures the U.S. currency against six peers, was last at 105.24. The index is set to clock a 0.8% decline for the week, its worst weekly performance since early March.
The Federal Reserve this week left rates unchanged and signalled that its next policy move will be to lower its rates, though chair Jerome Powell noted that recent strong inflation readings suggest the first of these cuts could be a long time coming.
“The Federal Reserve has clearly had its confidence shaken by the recent string of disappointing inflation releases,” said Susan Hill, senior portfolio manager at Federated Hermes.
While the bar for moving back to a tightening bias is quite high, it seems likely that the current 5.25%-5.50% Fed Funds target range will be unchanged for the next several months, Hill said.
In after-market hours Apple, opens new tab reported quarterly results and forecast that beat modest expectations and unveiled a record share buyback program, sending its stock up almost 7% in extended trade.
E-mini futures for the S&P 500 rose 0.29%, while Nasdaq futures are up 0.58%.
U.S. economic data on Thursday also showed the labour market remains tight, ahead of key government payrolls data due later on Friday. Economists polled by Reuters forecast 243,000 jobs, with estimates ranging from 150,000 to 280,000.
In commodities, U.S. crude rose 0.24% to $79.14 per barrel and Brent was at $83.86, up 0.23% on the day.
Spot gold eased 0.1% to $2,300.75 an ounce and were set for second straight weekly decline.
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