Shares across Asia were mostly in positive territory on Friday following sharp gains on Wall Street and in Europe yesterday. China’s main indices were 1% higher after slumping by over 6% on Thursday. Markets took support from comments by the People’s Bank of China governor who tried to reassure world leaders at the G20 summit that China would not engage in competitive devaluation.
Meanwhile, the OECD urged the G20 to press ahead with structural reforms and the IMF called for a coordinated stimulus program to prevent the global slowdown from developing into a full-blown recession.
In Japan, annual inflation in January was unchanged from the previous month at 0%, in line with estimates. The ‘core-core’ rate of inflation, which excludes food and energy items, eased to 0.7% in January from 0.8%, while the Bank of Japan’s own core measure also slowed, from 1.3% to 1.1%. This puts pressure on the Bank of Japan to step-up with further monetary stimulus and is likely to cut rates deeper into negative territory in the coming months.
The yen was slightly weaker against the euro on Friday but was firmer against the dollar. The euro climbed to 124.80 yen in late Asian trading but the dollar was unable to hold above 113 yen and fell back to 112.87 yen.
The euro edged higher against the dollar on Friday despite long-term inflation expectations dropping to record low levels. A fall in long-term inflation expectations increases the odds of the European Central Bank opting for more aggressive monetary stimulus when it meets in March. The euro was higher at 1.1057 dollars in late Asian session.
The pound was slightly firmer against both the dollar and the euro despite data out today from the GfK survey showing consumers in Britain were less confident in February. Sterling was testing the 1.40 level against the dollar today, while the euro was weaker at 0.7889 pounds.
Oil posted another late surge on Thursday as traders turned more optimistic of further measures by the world’s top producers to limit output. US oil futures jumped back above $33 a barrel and were last up 0.5% at $33.25 a barrel.
This boosted the Canadian dollar, which climbed to 2½-month highs. The US dollar fell 1.5% yesterday against the loonie and was last trading at 1.3527 dollars in late Asian session today.
Coming up later today, the market’s focus will mostly be on US data as the second estimates of fourth quarter GDP figures are published along with the latest personal income and spending numbers.