Sydney: The euro jumped and Asian stocks extended gains on Friday after stunning German data showed Europe’s biggest economy grew at its fastest pace in 23 years, alleviating some doubts about the strength of global growth.
The euro climbed to as high as $1.2906 after Germany’s economy was shown to have grown 2.2% last quarter, handily beating forecasts for a 1.3% rise.
“The German economy is booming thanks to global demand,” said Andreas Scheuerle, an analyst at Dekabank in Germany. “I can see 3% growth this year, even a bit more than 3%.”
The MSCI index for Asian stocks outside Japan rose more than a percent before giving up some of that gain.
Germany’s remarkable growth report turned the spot light away from the yen, which shunned 15-year peaks on Friday, daunted by talk that Tokyo may intervene to curb its strength.
Swirling talk that Tokyo will weaken the yen by undertaking more quantitative easing kept the dollar off a 15-year trough of 84.72 hit on Wednesday.
The retreat in the yen, which had zoomed up by as much as 3.9% before all the talk of intervention, mirrored similar pull-backs in other assets that were over-bought or over-sold this week when investors vexed about global growth prospects.
But some analysts warned the market cheer may not last. A raft of US data including consumer confidence and consumer prices are due later, and investors fear they may disappoint.
South Korea’s stock market was the best regional performer, climbing 1.4% from one-month lows, led by technology stocks such as Samsung Electronics.
For the week however, the regional MSCI index was still down some 2.5%, its worst run in six weeks.
Indeed, data from EPFR showed stocks were currently not a popular investment choice, with investors preferring bonds and money market funds instead.
Hong Kong stocks fell for a fourth straight session as property stocks slid late in the day, pushing the benchmark index to its worst weekly performance since early July.
Stocks came under heavy selling pressure during the week as further signs of a faltering US recovery and a moderating Chinese economy prompted investors to sell riskier assets and take profits from a recent rally.
The Hang Seng index ended down 0.2%, taking losses for the week to 2.8%.
The Shanghai Composite index closed 1.2% higher as property shares reversed earlier losses that were triggered by a central bank statement, which showed a steep drop in new mortgage loans in Shanghai.
Australian stocks bounced 1.3% higher after three days of heavy losses, as bargain-hunters stepped in to buy the beaten-down materials sector, but worries lingered about the outlook.
Global miners BHP Billiton and Rio Tinto both buoyed the market with healthy gains, rising 1.9% and 2.3%, respectively.
But for the week, the benchmark Australian index still ended down 2.3%, the first negative week after five weeks of gains, as a swathe of data from the United States, UK and China revived worries about global economic recovery and local companies sounded cautious about the outlook.
Stocks in India, Singapore and Taiwan closed less than a percent higher.
Japan’s Nikkei rose 0.4%, drawing support from an apparent halt in the yen’s advance against the dollar after Japanese officials stepped up their campaign against the yen’s rise with a series of comments.
But the benchmark lacked clear direction, moving in and out of negative territory, as investors remained doubtful that dollar/yen moves will stabilize anytime soon.
Yen Intervention Nigh?
The yen pulled back after hitting 15-year highs against the dollar earlier this week on news Japan’s Prime Minister and the central bank chief would meet next week to discuss the yen. The greenback traded around 85.70 yen after rising to 86.21 yen.
Japanese authorities heightened their rhetoric and the Bank of Japan was seen checking rates on Thursday after the yen climbed to 84.72 yen on Wednesday, its highest since July 1995.
“We’re seeing a bit of a pullback on worries of what might happen over the weekend, but we see the risk of intervention as low, and have a positive view on the yen,” said Adam Cole, global head of FX strategy at RBC Capital Markets.
Market players say they do not expect actual intervention unless the dollar makes a move toward its record low of 79.75 yen, or a drop becomes more volatile.
“This is an opportunity to cover some short (dollar) positions, but traders are likely to continue to target a break of 80 yen,” said Tsutomu Soma, senior manager of foreign securities at Okasan Securities.
Oil rose to around $76 a barrel after a three-day price slide as robust euro zone growth data and buoyant stock markets helped allay doubts on the outlook for global fuel demand.