(AFP- 16 JUNE) Asian markets mostly rose on Friday following a sell-off the previous day, while the dollar and pound extended gains on growing expectations of a hike in US and British interest rates. Equity traders have suffered a fraught week as the crisis engulfing Donald Trump picks up pace, technology firms tumbled from recent highs and energy plays were hammered by plunging oil prices.
But they shifted back into buying mode Friday, with Tokyo boosted by a surge in the dollar against the yen. The greenback has rallied around two percent against the yen from lows touched before the Federal Reserve on Wednesday lifted borrowing costs and indicated further tightening of monetary policy. The central bank also outlined plans to suck cash out of the financial system by scaling back the bonds on its balance sheet.
Tokyo’s Nikkei index closed up 0.6 percent, with the yen weakening after the Bank of Japan refused to alter its accommodative monetary policy. However, governor Haruhiko Kurada is facing pressure to provide some guidance on its future plans as the economy improves and concerns grow about a widening gap between US and Japanese rates.
– End of gravy train –
Hong Kong added 0.2 percent a day after tumbling more than one percent, while Sydney and Singapore each put on 0.2 percent. Wellington and Taipei also saw healthy gains but Shanghai ended off 0.3 percent. Seoul was narrowly higher.
The pound extended gains after surging on Thursday in response to the surprise news that three out of the Bank of England’s eight policy board members had voted for a rate hike as inflation continues to rise on the back of increasing import costs.
Sterling had fallen below $1.270 before the decision but bounced to as high as $1.2795 afterwards before edging back slightly. However, it remains pressured by political uncertainty following last week’s election that saw the ruling Conservatives of Prime Minister Theresa May lose their majority.
Analysts said the post financial crisis era of ultra-low rates and easy money was coming to an end as central banks around the world began to tighten the belt. “The markets continue to digest the latest signals from the Federal Reserve Board who are now actively discussing how and when to pare back the balance sheet,” said Stephen Innes, senior trader at OANDA, in a note.
“But just as significantly the investors are now coming to grips with the notion that perpetual global central bank gravy train may be coming to an end.” In early European trade London rose 0.4 percent, Paris rallied one percent and Frankfurt jumped 0.5 percent.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 0.6 percent at 19,943.26 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 25,626.49 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,123.37 (close)
London – FTSE 100: UP 0.4 percent at 7,448.14
Euro/dollar: UP at $1.1164 from $1.1147 at 2100 GMT
Pound/dollar: UP at $1.2778 from $1.2756
Dollar/yen: UP at 111.16 yen from 110.93 yen
Oil – West Texas Intermediate: UP 20 cents at $44.66 per barrel
Oil – Brent North Sea: UP 31 cents at $47.23 per barrel
New York – Dow: DOWN 0.1 percent at 21,359.90 (close)