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Markets Update am

Equities fall after strong week

Solid China data fail to boost region’s main indices, Europe called lower

Asian stocks were subdued on Friday as caution over a weekend meeting of oil producers tempered risk sentiment, while the region’s markets took China’s relatively upbeat GDP data in stride as the numbers were in line with expectations.

Europe’s main national stock benchmarks are in neutral gear.

The FTSE 100 is down 0.2 per cent, looking shy of the 2016 high it hit earlier in the week, but outperforming its continental neighbours thanks to a strong showing for resource stocks.

The Xetra Dax 30 is down 0.6 per cent, with the CAC 40 in Paris down 0.5 per cent. The region-wide Euro Stoxx 600 is down 0.3 per cent, tracking a general drift lower among their Asian counterparts.

The Shanghai Composite is down 0.1 per cent while the technology-focused Shenzhen Composite is off 0.2 per cent. Hong Kong’s Hang Seng is down 0.1 per cent.

Japan’s Nikkei .N225 was down 0.3 percent and Australian stocks edged up 0.5 percent .

South Korea’s Kospi .KS11 inched down 0.2 percent.

China’s economy grew 6.7 percent in the first quarter from a year earlier, and while this was the slowest since 2009, it met expectations and provided additional evidence that a slowdown there may be bottoming out.

“All this obsession with a Chinese hard-landing I think is a bit too much. Chinese economic data is showing signs of stabilisation, including recent PMI numbers, as well as the latest figures on industrial production and retail sales,” said Suan Teck Kin, economist at the United Overseas Bank in Singapore.

Stocks have gained globally this week against this backdrop, with the S&P 500 reaching its highest point so far this year overnight, and taking it a step closer to record highs scaled almost a year ago.

Other China-exposed assets are faring better, including the Australian dollar, which is up 0.4 per cent at $0.7729. Australia’s S&P/ASX 200 is up 0.8 per cent.

In Japan, the Nikkei 225 is down 0.4 per cent. However, strong midweek gains meant the benchmark is poised for its best weekly performance since mid-February, up about 6 per cent.

In currencies,  A weaker yen is also providing some relief. Japan’s currency is down for a fourth consecutive day, easing 0.2 per cent to Y109.55 per dollar, leaving it on track for its biggest weekly drop — 1.4 per cent — since the final week of January.

The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent at 94.962, eyeing a fourth straight day of gains.

The euro is down 0.2 per cent at $1.1246, while sterling is flat at $1.4148.

Oil prices have pulled back from recent peaks on concerns that the top producers’ meeting may not result in a tightening of supply.

U.S. crude oil CLc1 was up 6 cents at $41.56 a barrel, but still off a 4-1/2-month peak above $42 reached mid-week when market hopes were higher that the Doha producers’ meeting would result in tighter supply. Brent crude rose 5 cents to $43.89 a barrel LCOc1

 

Bonds

U.S. Treasuries were headed for their biggest weekly loss in more than a month, with the 10-year yield having increased six basis points to 1.78 percent over the past five days. The yield fell one basis point on Friday.

“There’s an unwinding of safety assets to risk assets,” said Kazuaki Oh’E, the head of fixed income at CIBC World Markets Japan Inc. in Tokyo. “The stock market hitting a record for the year” fueled the shift, he said.

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