Hong Kong: Asian stocks edged up on Friday, as financials gained on hopes that credit fears have eased, although the yen drifted higher with investors cautious until more details emerge on the US Treasury’s bank stress tests.
The MSCI index of Asia Pacific shares outside Japan was nearly unchanged this week after six consecutive weeks of gains, with sentiment on the financial sector fluctuating as first quarter bank results rolled in.
Gold prices held their ground above $900 and commodities such as copper and oil edged lower after reports overnight reflected no change in deteriorating US housing and labour market conditions.
Japan’s Nikkei share average was down 0.1% in choppy trade, with pressure on stocks associated with the domestic economy winning out over demand for industrials and technology shares.
Though their own profit outlooks looked grim, Japanese bank and brokerage stocks got a boost after several smaller US banks posted better-than-expected quarterly results. Nomura Holdings was up 3.2% after local media said it would slash jobs to cut costs.
“We’re in the kind of environment now where everyone is looking to take profits, though the market’s also unlikely to fall all that much either,” said Katsuhiko Kodama, senior strategist at Toyo Securities.
The MSCI Asia Pacific ex-Japan index was up 0.8% on the day. Hong Kong’s Hang Seng index edged up 0.4%.
Near-term the key event for many investors is the public release on 4 May of a series of tests designed to see how 19 US banks, including Bank of America, Citigroup and JPMorgan, would fare under more adverse economic conditions.
US officials were expected on Friday to release the methodologies used in the tests.
The situation is precarious since results that are too positive would increase scepticism among investors, while really negative results could renew indiscriminate selling of financials and exacerbate market volatility.
The yen drifted higher ahead of a long holiday weekend in Japan, while emerging Asian currencies strengthened against the US dollar on hopes that deceleration in the global economy has slowed and China is providing a stabilising force.
“Within Asia, we cannot escape the conclusion that economies with leverage to China will outperform those with greater leverage to developed economies...,” said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong in a note.
The Australian dollar was down 0.9% to ¥69.35, though it was still up some ¥7 since February.
The British pound fell 1.1% to ¥142.68.
Spot gold rose 0.3% to $904.65 an ounce, but still appeared to be in a slow decline after rising just above $1,000 in February.
US crude prices slipped 0.7%, or 36 cents, to $49.26 a barrel after a late rally on Wall Street overnight led oil to close higher.