Asian stocks rise led by China, yen rises on CPI: market turnaround


The yen strengthened on Friday after inflation figures in Tokyo surpassed estimates. Asian shares rose.

Stocks in China rose on speculation that Beijing will provide more support to the economy at a key policy meeting in December. The country also expanded tariff exemptions on certain U.S. products, implying that the country may be less willing to take a hard line amid U.S. trade tensions. US markets were closed on Thursday for Thanksgiving.

Stocks in Australia and Japan fell, while those in South Korea fell the most in the region, after a surprise interest rate cut by the central bank shifted investor attention to slowing economic growth. MSCI’s regional stock index rose 0.5% on Friday, but was on track for a second straight monthly loss.

The yen rose to its highest level in more than a month against the dollar, strengthening above 150. The dollar fell against major currencies, with a strong dollar index heading for its first weekly decline in two months. Government bond yields fell as cash trading resumed in Asia.

These moves underlined subdued risk appetite in global markets during a week typically marked by lower volumes due to the US holiday. The month-end positioning may also prompt some investors to rebalance their portfolios after a record high for US stocks this week. US stock futures rose.

Gains for the Japanese currency were helped by inflation data from Tokyo, which showed prices rising more than expected on an overall basis, but largely in line with estimates when fresh food and energy were excluded. Swap market prices indicate a more than 60% chance that the Bank of Japan will raise rates at its meeting next month.

“The strong CPI reading in Tokyo appears to have once again supported further strengthening,” said Alan Lau, FX strategist at Malayan Banking Bhd. “With a BOJ basis point gain on December 25 looking increasingly likely, we see USD/JPY sustainably breaking below the key line. 150.00 supports and moves lower to test the 142.00 level where it failed to break decisively in September”

Japan could also delay a decision on raising taxes to help cover rising defense spending, a senior coalition government official said.

China’s healthcare stocks rose following the latest national drug reimbursement list from the agency that oversees national health insurance. The newcomers include a record number of 38 innovative medicines. The country’s food, drink and dining supplies also rose after officials held a meeting to boost consumption.

Indonesia’s benchmark stock index fell about 10% from a year’s high, heading for a technical correction due to slowing economic growth and regional uncertainties following Donald Trump’s victory in the US election.

Australian 10-year bond yields were flat after Reserve Bank Governor Michele Bullock said core inflation remains too high and pushed back expectations of near-term rate cuts. The Australian dollar strengthened against the greenback on Friday.

Elsewhere in currency markets, Brazil’s real tumbled to a record low on disappointment over a government plan to cut spending, while the Mexican peso recovered amid thin trading due to the US holiday.

Some investors are also recalibrating their expectations for U.S. inflation and future Federal Reserve rate cuts following data released earlier this week.

PCE data released earlier this week shows that “core services emerged quite strongly,” said Kevin Thozet, member of Carmignac’s investment committee. “We are not heading for double-digit inflation, but the disinflationary trend is stagnating. The outcome of the US election could extend this cycle with tax cuts.”

On the corporate front, shares of Hong Kong property developer New World Development Co fell. after Bloomberg reported that Chief Executive Officer Eric Ma is expected to resign, citing people familiar with the matter.

In commodities, oil gained as the market now looks towards an upcoming OPEC meeting that has been postponed until December 5. Gold rose for a fourth session but is still on track to fall for the first month of the past five.

Some of the major moves in the markets:

This story was produced with the help of Bloomberg Automation.

This article was generated from an automated feed from a news agency without any changes to the text.

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