Asia stocks slip, yen gains amid political turmoil

Sydney - A rally in Asian stocks petered out on Friday, and the yen climbed, as investors considered the implications of continuing personnel turmoil in the Trump administration.

Japan’s currency, often the go-to asset in times of uncertainty, advanced after the Washington Post reported that President Donald Trump plans to remove his national security adviser, something White House Press Secretary Sarah Huckabee Sanders later denied was happening.

Stocks were already lower in the region before the reports, with a lacklustre session in the US overnight offering little fresh direction ahead of next week’s Federal Reserve policy meeting. Ten-year Treasury yields ticked lower and are heading for a weekly drop after a softer tone in US economic data.

Any removal of H.R. McMaster as the national security adviser would follow the resignation of the White House’s top economic adviser, Gary Cohn, and the ouster of the secretary of state.

Investors were earlier weighing the prospects for heightened US trade protectionism after new White House appointee Larry Kudlow said he’d sell gold and buy the greenback, which gained on Thursday.

"Those developments are negative for dollar-yen and the Nikkei," Tohru Sasaki, head of Japan markets research at JPMorgan Chase in Tokyo, said of the news on the departure of top US policy makers.

At the same time, "the market is getting used to political problems," both in the US and Japan, he said on Bloomberg Television - so moves may be short-lived.

A political scandal in Japan, with the potential resignation of the country’s finance minister, remains a focus for traders. Weekend poll results on Prime Minister Shinzo Abe’s approval rating may prove key. Also upcoming is a Monday vote in China’s legislature on the next central bank chief in the world’s No. 2 economy.

Elsewhere, West Texas crude steadied above $61 a barrel as signs of stronger US fuel consumption balanced OPEC’s forecasting for the first time that new supplies from its rivals will exceed demand growth this year.

Here are some of the key things happening as the week ends:

Revised Japanese industrial production data are out on Friday. EU27 government officials discuss the European Union’s Brexit position.

And these are the main moves in markets:

Stocks

Japan’s Topix index slipped 0.2% as of 12:30 pm in Tokyo. The Shanghai Composite lost 0.2% and Hong Kong’s Hang Seng Index fell 0.3%.

South Korea’s Kospi slid 0.4%. Australia’s S&P/ASX 200 Index was up 0.5%. Futures on the S&P 500 Index were down 0.1% after the underlying gauge on Thursday fell 0.1%, bringing this week’s loss to 1.4%.

Currencies

The Bloomberg Dollar Spot Index traded flat after advancing 0.5% on Thursday for its biggest rise in over two weeks. The euro was flat at $1.2302. The yen gained 0.3% to 105.98 per dollar. The New Zealand dollar lost 0.3% to 72.55 US cents.

Bonds

The yield on 10-year Treasuries slid about one basis point to 2.82%. Australia’s 10-year yield dropped three basis points to 2.68%.  

Commodities

West Texas Intermediate crude was little changed at $61.18 a barrel. Gold was steady at $1 316.62 an ounce after falling 0.7% on Thursday.