Asian shares weakened and gold reached new highs as markets gauge when the Fed will cut.
Gold rose to a new all-time high after a mild reading on producer price inflation kept the Federal Reserve’s hopes of easing this year alive. – This is the week that reduced interest rate cut bets.
The dollar remained near a five-month high after rising nearly 1% against major peers this week.
Crude oil continued to trade above the $90 level amid heightened tensions in the Middle East.
Markets expect the Federal Reserve to cut interest rates by less than two quarters of a point this year. That’s lower than the three cuts Fed officials announced last month after rushing to reduce their easing bets following Wednesday’s CPI shock.
Federal Reserve officials said Thursday there was no urgency to ease, with Boston Fed President Susan Collins saying she was opposed to pursuing interest rate cuts in the near term due to the health of the economy and the uneven inflation retreat. However, IG analyst Tony Sycamore remains bullish on the stock’s outlook. “At the end of a busy week, the backdrop for U.S. equity markets remains favorable even without Fed interest rates, provided U.S. economic growth remains resilient, inflation is contained and the bond market sell-off does not accelerate,” he said.
Japan was the only positive gainer in the Asia-Pacific region on Friday, with the Nikkei 225 index up 0.5%.
Technology stocks led overnight, inspired by a rally in their US peers. The index’s gains may have been even greater because shares of Fast Retailing, owner of the Uniqlo chain, have plummeted since disappointing performance.
Elsewhere, markets suffered mostly modest losses. Korea’s KOSPI fell 0.39%, and Singapore’s Straits Times index fell 0.12%. The two countries’ central banks decided not to change their policies on Friday.
The worst losses were in Hong Kong, where the Hang Seng Index fell 1.31% as property stocks fell. Blue chips from mainland China were flat.
MSCI’s largest index of Asia-Pacific shares outside Japan fell 0.3% but is still up 0.52% for the week.
U.S. long-dated Treasury yields were at 4.5641% in Asian trading, close to an overnight high of 4.5680%, a level last seen on Nov. 14.
Rising yields supported the dollar as it rose to a 34-year high of 153.32 yen on Thursday. It last changed hands at 153.105 yen, sparking a new intervention warning from Japan’s finance minister.
The dollar index, which measures the currency against the yen, euro and four other currencies, was trading at 105.26 after reaching 105.53 overnight, its highest since Nov. 14. It rose 0.95% this week.
The euro bought $1.07245 after falling to a nearly two-month low of $1.0699 on Thursday when the European Central Bank signaled a rate cut soon.
Gold prices hit a record $2,395.29, up 2.74% for the week.
Crude oil prices rose after Iran said it would retaliate against Israel’s airstrike on its embassy in Syria.
Brent crude futures rose 34 cents, or 0.38%, to $90.08 per barrel, while U.S. West Texas Intermediate crude futures rose 44 cents, or 0.51%, to $85.45 per barrel.
