SINGAPORE: Asian shares inched higher on Friday, while the dollar retreated from a one-month peak as investors assessed U.S. economic data that largely showed a resilient labour market and awaited a crucial non-farm payrolls report due later in the day.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.28%, but was on course to clock a weekly loss of 2%, its worst run in more than a month.
Futures indicated European stocks were set for a higher open, with Eurostoxx 50 futures up 0.35%, German DAX futures up 0.23% and FTSE futures up 0.19%.
Investor attention will be squarely on the July U.S. nonfarm payrolls report, with a Reuters survey of 80 economists expecting payrolls to increase by 200,000 jobs last month, after rising 209,000 in June.
Economists who have long been forecasting a downturn by the fourth quarter of this year are increasingly becoming convinced that the "soft-landing" scenario for the economy envisaged by the U.S. Federal Reserve is now possible.
"People are trying to get their head around the new 'Goldilocks' scenario of rates probably not going much higher, but we might avoid a recession, which I think is still a very questionable assumption," said Rob Carnell, ING's regional head of research, Asia-Pacific.
Overnight, U.S. stocks closed little changed after a choppy trading session, as investors weighed rising Treasury yields with the latest batch of economic data and earnings.
Data showed the number of Americans filing new claims for unemployment benefit rose slightly last week, while layoffs dropped to an 11-month low in July as labour market conditions remained tight.
E-mini futures for the S&P 500 rose 0.35% in Asian hours, with a mixed set of earnings from technology bellwethers likely to dominate U.S. markets.
Amazon.com reported sales growth and profit that beat analyst estimates, whereas Apple forecast a sales slump to continue into the current quarter.
Geir Lode, head of global equities at Federated Hermes, said broader market participation will be necessary for the bullish trend to be sustained.
"Year-to-date performance has been driven by a few select mega cap companies, but this will need to give way to wider participation across mid and small-cap names for the market rally to continue," Lode said.
CHINA BUMP
Chinese blue-chips rose 0.64%, while the Shanghai Composite Index was up 0.5%. The Hong Kong benchmark Hang Seng climbed 1%, on course to snap its three-day losing streak.
China's central bank will flexibly use policy tools to ensure reasonably ample liquidity in the banking system, an official said on Friday. The news conference came after China's central bank governor pledged on Thursday to guide more financial resources toward the private economy.
"It's still very much keeping the light support going rather than injecting a massive dollop of stimulus," ING's Carnell said.
Investors have been pining for policymakers to deliver more broad-based stimulus to boost the post-pandemic recovery as the world's second-largest economy struggles with weak demand at home and abroad.
Meanwhile, U.S. Treasury yields have been elevated this week partly due to a rise in supply, with the Treasury Department announcing a $103 billion offering on Wednesday.
The yield on 10-year Treasury notes was at 4.176% in Asian hours, just shy of the nine-month peak of 4.198% touched on Thursday. The yield on the 30-year bond eased to 4.276%, close to the nine-month high of 4.326%.
In currencies, the dollar index, which measures the U.S. currency against six peers, fell 0.029% to 102.42, easing away from the near one-month peak of 102.84 reached on Thursday. The index was set to record its third straight week of gains.
Sterling last fetched $1.2727, up 0.11% on the day, after a choppy session overnight as a 25 basis point interest rate hike from the Bank of England provided little comfort for the pound.
In commodities, U.S. crude rose 0.22% to $81.73 per barrel and Brent was at $85.26, up 0.14% on the day.
Chicago wheat jumped more than 2% with attacks near a key Russian grain port in the Black Sea region triggering fresh concerns over global grain supplies. The most-active wheat contract on the Chicago Board of Trade (CBOT) rose 2.2% to $6.40-1/2 a bushel. - Reuters
