Asian stocks follow Wall Street higher

by Jonathan Adams
Wall Street

Nikkei climbed 1%, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6%, Taiwan’s tech-heavy stock index jumped 1.8%, while Chinese blue chips rose 0.3%

Asian stocks rose on Friday, setting the region up for a weekly gain, as investors tempered concerns about hot inflation and the prospects of an early tapering of stimulus by the Federal Reserve.

Japan’s Nikkei climbed 1%, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6%.

Taiwan’s tech-heavy stock index jumped 1.8%, leading gains in the region, while Chinese blue chips rose 0.3%.

For the week, an index of stocks across Asia-Pacific was set for a 1.9% advance.

Futures pointed to a further 0.3% gain for the S&P 500 later in the day, following a more than 1% jump on Thursday.

Tech stocks led those gains as Treasury yields dropped following a weaker-than-expected U.S. business activity reading. A decline in commodity prices, particularly oil, also undermined the thesis for too-hot inflation.

It’s still a market trying to work out where inflation is going to go, and what that might mean for Fed policy somewhere down the line, said Kyle Rodda, a market analyst at IG in Melbourne.

The drop in oil prices accompanied by lower bond yields has changed sentiment very quickly, he said.

The Philadelphia Federal Reserve Bank said its business activity index fell to 31.5 from 50.2 in April, its highest pace in nearly half a century. The reading was short of economists’ expectations of 43.0, a Reuters poll found, and cast doubt on how fast the economy can continue to heat up.

Other data on Thursday showed the number of Americans filing new claims for unemployment benefits fell further below 500,000 last week, but jobless rolls swelled in early May, which could temper expectations for acceleration in employment growth this month.

The Dow Jones Industrial Average added 0.6%, while the Nasdaq Composite gained 1.8%.

The yield on benchmark 10-year Treasury notes held Thursday’s more-than 4 basis-point decline to hover around 1.635% in Asia.

Oil prices recovered slightly after steep drops on Thursday.

Brent crude rose 0.2% at $65.21 a barrel after diving 2.3%. West Texas Intermediate crude gained 0.4% to $62.16 a barrel after a 2.1% tumble.

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