TOKYO: Asian equities shook off earlier weakness on Friday, as a softer yen supported Japanese stocks and firm export data drove South Korean markets higher, although rekindled concerns about U.S. protectionist trade policies limited gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.1 percent but the index was still down roughly 0.6 percent for a week in which it touched a six-week low on concerns about political developments in Italy.
Wall Street shares posted deep losses overnight after the United States said it would impose tariffs on aluminum and steel imports from Canada, Mexico and the European Union.
Fears of a global trade conflict, which had partially receded over the past few weeks, were reignited as Washington’s allies took steps to retaliate against the U.S. measures.
However, regional sentiment recovered somewhat with South Korea’s KOSPI .KS11 up 0.7 percent on upbeat export data while Japan’s Nikkei .N225 advanced 0.3 percent, buoyed by the yen’s weakening against the dollar.
“President (Donald) Trump has not accomplished very much in terms of trade issues and is likely to remain vocal with the U.S. midterm elections coming up,” he said.
In China, stocks were volatile, with the long-awaited inclusion of big cap shares from the country in MSCI’s emerging markets index failing to buoy the market or attract any immediate flows of foreign money. [.SS]
The Shanghai Composite Index .SSEC fell 0.3 percent and the blue-chip CSI300 index .CSI300 dropped 0.55 percent.
On Friday, about 230 yuan-denominated mainland A-shares were included in MSCI’s emerging markets index for the first time in a step toward deeper integration of China’s bourses with the rest of the world.
Bank of America Merrill Lynch estimates that at full inclusion, China’s A-shares could account for some 30 percent of MSCI’s emerging market index.
“It took Korea and Taiwan some six to nine years to gain full weighting. It may take (China’s) A-shares longer in our view due to size, access and capital mobility constraints,” wrote equity strategists at Bank of America Merrill Lynch.
In currencies, the Canadian dollar CAD=D4 and the Mexican peso MXN=D2 were on the defensive, weighed by the U.S. decision to impose tariffs on aluminum and steel imports from these countries.
The deal by the Italian parties averted the prospect of a new snap election, which had rattled global markets earlier this week and sent the euro to a 10-month low of $1.1510 on Tuesday.
The dollar climbed 0.4 percent to 109.240 yen JPY=. It has lost about 0.1 percent against the yen this week as the earlier global market tumult had enhanced demand for the Japanese currency, which is a perceived safe-haven.
Brent crude LCOc1 dipped 0.1 percent to $77.50 a barrel.
Prices swerved between $$74.49, a three-week low, to $78.75 this week on speculation towards output by major oil-producing nations.
Brent’s premium over U.S. crude reached its widest since March 2015 this week as a lack of pipeline capacity in the United States has trapped a lot of output inland. —Reuters