Japanese Shares Drop After US Stocks Notch a Gain: Markets Wrap
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(Bloomberg) -- Major Asian equity benchmarks splintered between gains and losses Friday after Wall Street rallied for the first time this week as Tesla Inc. shares jumped.
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Equities in Japan fell while share indexes in Australia and South Korea advanced. US futures were little changed after the S&P 500 rose 0.2% and the Nasdaq 100 climbed 0.8%. The moves partly reflected the 22% leap for Tesla shares on strong earnings and a forecast outlining as much as 30% growth in car sales next year.
Treasuries were stable after advancing Thursday. An index of the dollar was steady after tracking US yields lower Thursday. Australian and New Zealand bond yields fell Friday.
The moves come as traders prepare for the US election in less than two weeks and economic data including payrolls next week that will provide further clarity on the path ahead for interest rates.
“After the election we are still expecting the dollar index to trend lower because we expect the Fed will further cut interest rates no matter who wins,” said Carie Li, global market strategist, DBS Bank Hong Kong, speaking on Bloomberg Television.
The yen was slightly lower after a Thursday rally against the dollar ahead of the weekend’s election that may see Japan’s ruling coalition is in danger of losing its majority in the lower house of parliament for the first time since 2009. Such an outcome would weaken the yen and Japanese stocks, according to strategists.
Gains for US stocks and bonds on Thursday came as US economic data showed new home sales beating estimates, initial jobless claims dropping and business activity expanding at a solid pace.
The “Goldilocks” data that was broadly in line with forecasts “is the best outcome for a continued rebound in stocks and bonds,” said Tom Essaye at The Sevens Report.
In Japan, Governor Kazuo Ueda signaled the central bank won’t hike interest rates next week, with almost all BOJ watchers already expecting no policy shift this month. Ueda spoke ahead of the nation’s election this weekend and after the yen slid to the lowest level since July 31 against the dollar earlier this week.
Elsewhere in Asia, China’s recent barrage of fiscal measures fall short of what’s needed to address deflationary risks, according to one senior International Monetary Fund official. The central government “has to spend” more to address the property crash and ease price pressures, according to Krishna Srinivasan, the organization’s Asia-Pacific department chief.