Overnight, the S&P 500 and the Nasdaq again closed at record highs as US data including retail sales and jobless claims beat forecasts, indicating a modest improvement in the economy that should give the Federal Reserve time to gauge the inflation impact from higher US tariffs.
Streaming giant Netflix beat Wall Street’s lofty expectations for second-quarter earnings in part due to a weaker US dollar. Its share price, however, fell 1.8% in after-hours trading, with analysts saying much of the growth had already been priced in.
On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8% to its highest since late 2021, bringing the weekly gain to 1.7%.
Japan’s Nikkei, however, slipped 0.2%, and the yen was at 148.54 per dollar, down about 0.7% this week after polls showed Prime Minister Shigeru Ishiba’s coalition was in danger of losing its majority in the election on Sunday.
Data on Friday showed Japan’s core inflation slowed in June due to temporary cuts in utility bills but stayed beyond the central bank’s 2% target. The rising cost of living, including the soaring price of rice, is among reasons for Ishiba’s declining popularity.
“If PM Ishiba decides to resign on an election loss, USDJPY could easily break above 149.7 as it would usher in an initial period of political turbulence,” said Jayati Bharadwaj, head of FX strategy at TD Securities.
“JPY could reverse the recent dramatic weakness if the ruling coalition wins and is able to make swift progress on a trade deal with Trump.”
Chinese blue-chips rose 0.3% while Hong Kong’s Hang Seng index gained 1.2%.
The Tapei-listed shares of TSMC, the world’s main producer of advanced AI chips, rallied 2.2% after posting record quarterly profit on Thursday, though it said future income might be affected by US tariffs.
In the foreign exchange market, US the dollar was on the back foot again on Friday, having bounced 0.3% overnight against major peers on the strong economic data. For the week, it is headed for a second successive gain of 0.6%, bouncing further from a 3-1/2 year low hit over two weeks ago.
Fed governor Christopher Waller said on Thursday he continues to believe the central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signalled no desire to move.
Fed funds futures imply next to no chance of a move on July 30, while a September rate cut is just about 62% priced in.
Treasury yields were slightly lower in Asia. Benchmark 10-year US Treasury yields slipped 2 basis points to 4.445%, having moved little overnight. Two-year yields also edged 2 bps lower to 3.8981.
Oil prices were mostly steady on Friday, after gaining US$1 overnight following a fourth day of drones strikes on Iraqi Kurdistan oil fields, pointing to continued risk in the region.
US crude inched up 0.2% to US$67.66 per barrel and Brent also rose 0.2% to US$69.68 a barrel. They, however, lost about 1% for the week.
Spot gold prices were steady at US$3,337 an ounce but were set for a 0.5% weekly loss.