Chinese shares rallied on Friday. It helped pull Asian stocks off one-month lows. Meanwhile, attention moved to US non-farm payrolls.
During early Asian trading, E-Mini futures for S&P 500 were down 0.5%. They gave up all losses by afternoon.
Futures for Europe pointed to a weaker start. Those for Euro Stoxx 50, Germany’s Dax, and London’s FTSE were down 0.3% to 0.6%.
In Asia, Australian stocks sank more than 0.7%. Japan’s Nikkei share average dropped by more than 1% but then recovered and settled to a loss of 0.2%. Shares in Seoul declined by 0.4%.
Chinese shares opened in the red. However, they reversed losses with the blue-chip CSI300 index up 0.3%.
That left MSCI’s broadest index of Asia-Pacific shares outside of Japan down 0.4% at 694.87. However, they were still above the day’s low of 684.52, a level not seen since February 1.
Chris Weston, a Melbourne-based strategist for Pepperstone, stated that China had a decent rally at the lows, which pulled markets higher. We saw an excellent turnaround coming through, he said.
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Energy, staples, utilities have done well as a hedge against increasing rates.
Investors have their eyes on US payrolls
Earlier, equity investors were disturbed by a sell-off in US treasuries. It sent bond yields rising and lifted the dollar to its three-month high. Meanwhile, the Japanese yen dragged lower.
As for the oil market, OPEC and its allies agreed to maintain their supply reductions in April. They expect a more solid recovery in demand since they still speculate about substantial recovery from the coronavirus. After the agreement of the petroleum exporting countries, oil added more significant gains to its prices.
Investors are now alert to the release of the US non-farm payrolls for February. Ray Attrill, head of the forex strategy at National Australia Bank, stated that the market would be inclined to look through a weaker number. Later this year, investors are looking ahead to the US’s significant fiscal stimulus and the removal of Covid-19 restrictions.
US stocks dropped on Thursday. It happened after the Fed Chair Jerome Powell did not indicate about the Fed stepping up purchases of long-term bonds to hold down longer-term interest rates.
Powell has said the central bank was not going to change its loose monetary policy anytime soon. However, some analysts are still worried that increasing Treasury yields could herald higher borrowing costs. It would limit the fragile US economic recovery.
The yield on 10-year Treasuries rose above 1.5%. Still, it was below a one-year high of 1.614% it reached last week.