Tokyo: Asian shares extended gains on Friday on hopes the global recession is receding after key US companies beat earnings expectations, but deadly blasts in Jakarta weighed on Indonesian stocks and the rupiah.
The yen rose as Japanese exporters sold foreign currencies, with risk appetite dulling in the wake of the explosions and ahead of more US bank earnings. Oil fell towards $61.
European shares were set to edge higher for their fifth straight day of gains, echoing Asian and US gains, financial bookmakers said.
Blasts at the Ritz-Carlton Hotel and the Marriott Hotel in central Jakarta killed 9, police said. A car bomb exploded along a toll road, and Indonesia’s Metro TV said two had been killed.
Jakarta stocks fell 1.2% and the rupiah, which has been Asia’s best performing currency so far this year, lost 1% before paring losses.
Share markets have been keenly watched as a barometer of investor confidence, but risk appetite has waned as market players awaited earnings due out later on Friday, including Citigroup and Bank of America
“Already this morning there was a bit of profit-taking and a slight move away from risk trades,” said Mitul Kotecha, head of FX strategy at Calyon in Hong Kong.
Strong earnings for major US companies continued to cheer global markets on Thursday as the quarterly reporting season moved into higher gear, pushing US share indexes up about 1% overnight.
JPMorgan Chase & Co saw quarterly profit soar 36% and US bellwether International Business Machines Corp strongly beat forecasts in earnings announced after the bell.
But amid the good news, JP Morgan reported a surge in consumer credit losses, showing the economic recovery still has a long way to go, and Citigroup and Bank of America were expected to post relatively weaker performances, one trader said.
“Earnings from US banks have been upbeat, but there are concerns that the positive results could be limited to the second quarter,” said Takahiko Murai, general manager of equities at Nozomi Securities.
Asian shares ex-Japan rose 0.7% and looked on track for their highest close in a month. The index rose over 5% on the week, taking its gains so far this year to around 34%.
Asia ex-Japan equity funds were the only ones of the four major emerging markets fund groups to see inflows during the second week of July, according to global fund tracker EPFR, while Japan equity funds recorded inflows for the third straight week.
Japan’s benchmark Nikkei clawed up 0.6% to 9,395.32. Gains have been limited by political uncertainty since Monday, when embattled Prime Minister Taro Aso said he aimed to call an election for 30 August, despite grim prospects for his long-ruling conservative party.
Korean shares climbed 0.6% after rising as far as 1,445.60, a new 2009 high, with gains fueled by tech shares such as LG Display and LG Electronics
The Indonesian rupiah fell 0.7% to 10,200 per dollar in the wake of the explosions, prompting state banks to sell dollars to support it, traders said.
The dollar, which has been a defensive play for investors in the global economic crisis, hit a six-week low at 79.131 against the basket of six currencies on Thursday.