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Wellington - Asian stocks erased declines as the yen’s first drop in six days buoyed Japanese equities.
The Australian dollar and the South African rand led gains among commodity currencies as oil and industrial metals rose.
The Topix index swung to a 1.4% advance in Tokyo as the yen pulled back from its strongest level in one-and-a-half years, while US equity-index futures signalled a rebound from Thursday’s drop.
Crude oil jumped, heading for its seventh weekly advance in eight weeks, as US output continues to decrease before a meeting between suppliers to discuss freezing production. Nickel added 0.7% to lead base metals higher, while the Aussie and the rand strengthened at least 0.4%.
Investors are pausing for breath at the end of a wild week that saw equities whipsawed as volatility in the $5.3trn-a-day foreign-exchange market climbed toward a 2011 high. The top forecaster for the yen is bracing for it to surge past 105 versus the dollar as demand for havens sidelines efforts by the government to stem the currency’s rally.
“The yen has taken over from China as the antagonist,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand in Auckland. “The only certainty is uncertainty reigns.”
Fed impact
Minutes from the Federal Reserve’s March meeting this week noted concern over the global outlook and International Monetary Fund chief Christine Lagarde signalled the organisation is likely to lower its forecast for world growth. Alan Greenspan, reflecting in a Thursday panel discussion on international woes he confronted as Fed chairman in the 1990s, said global developments must inevitably be taken into account by US policy makers. Current Chair Janet Yellen, who was also on the panel, said she and her colleagues carefully consider the impact of their actions on the rest of the world.
China is due to publish a raft of economic indicators next week including March inflation and exports, with reports on European consumer prices and US retail sales also scheduled.
Stocks
The MSCI Asia Pacific Index added 0.1% as of 13:51 Tokyo time, reversing a loss of as much as 1.4%. The Topix’s gain pared its weekly decline to 0.8%. Fast Retailing Co. plunged 12% after Asia’s biggest retailer cut its profit forecast.
Hong Kong’s Hang Seng Index retreated 0.7%. Technology shares drove Australia’s S&P/ASX 200 Index down 0.4%. The Kospi index in Seoul dropped 0.3%, while New Zealand’s S&P/NZX 50 Index was down 0.4% to pare its eighth straight weekly advance.
Futures on the S&P 500 added 0.2% on Friday, after the US benchmark slid 1.2% last session, when declines in Goldman Sachs Group Inc. and JPMorgan Chase led the Dow Jones Industrial Average down by more than 170 points.
Currencies
The yen snapped a five-day climb, weakening 0.6% to 108.88 per dollar after surging to 107.67 last session, its strongest level since October 2014. Despite Friday’s pullback, the currency is still up more than 2.5% this week as the Fed’s dovish approach to US interest-rate policy weighs on the greenback and as traders speculate that officials are reluctant to intervene in the market.
Japan’s Finance Minister Taro Aso said on Friday that rapid yen movements - whether strengthening or weakening - are undesirable, especially if they’re abrupt. Recent movements have been one-sided and the government will act appropriately if necessary, he said.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed. The Aussie gained 0.6% to 75.39 US cents, while the rand strengthened 0.8%.
Bonds
While benchmark Treasuries unwound some of last session’s gains, Australian bonds led an advance in Asia. Yields on Australian government debt due in a decade fell five basis points, or 0.05 percentage point, to 2.40%. Rates on similar maturity Treasuries were up two basis points to 1.71% after falling seven basis points on Thursday.
US debt has advanced along with other haven assets such as the yen and gold amid renewed concern that easy monetary policies haven’t boosted global growth.
“We are seeing central bank fatigue,” Niv Dagan, executive director at Peak Asset Management in Melbourne, said by phone. “We’re definitely moving to a risk-off scenario and there’s been a strong flight to safety. Investors are cautious and are extremely nervous that global central bank intervention won’t actually stimulate growth in the economy.”
China’s 10-year sovereign bonds are heading for the biggest weekly drop since May, with yields up eight basis points to 2.92%, before a report next week that’s expected to show inflation accelerated in March.
Commodities
West Texas Intermediate crude rallied 2.3% to $38.11 a barrel, after falling 1.3% last session. Futures are on track for a 3.6% weekly advance. Brent was up 1.8% to $40.14 on Friday.
Speculation has returned that Russia and OPEC members can reach a deal on freezing oil output when they meet in Doha on April 17. Saudi Arabia has said it will only agree if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Iran’s support. An unexpected drop in U.S. crude inventories in data out this week also helped crude’s recovery.
Copper for three-month delivery added 0.3%, with nickel and tin also climbing. Copper slumped the most in three months last session, wiping out its gains for 2016, as miners and investors gathering at an industry conference in Chile expressed concern over demand for the metal. Nickel rallied 0.8% after sliding 2.3% Thursday.
