Asian shares rebounded on Friday as economic data suggesting the global economy is expanding took the edge off persistent fears that the U.S. Federal Reserve will likely start withdrawing stimulus next month. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 1 percent, bouncing decisively off a six-week low touched on Thursday. Japan's Nikkei stock average .N225 outperformed, surging 2.4 percent, as a weaker yen gave a tailwind to exporters' shares.
Asian gains tracked those in overseas markets in the previous session. European shares registered their best session since early this month and all three U.S. indexes ended higher despite a system glitch that stopped trading of more than 3,000 Nasdaq-listed shares for almost three hours. Purchasing managers surveys showed better-than-expected growth in the euro zone, a Chinese manufacturing rebound and U.S. manufacturing activity rising to a five-month high this month.
"These are positive catalysts as those countries are Japan's major export markets," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities In Tokyo. "Yesterday's upbeat China PMI data soothed the mood while some investors were frustrated over concerns regarding emerging countries. And therefore investors were not ready to turn 'risk on' yet. The data from the U.S. and Europe reassured them," he said.
U.S. Labor Department data also showed new claims for jobless benefits held near a six-year low last week, adding to signs that the U.S. labor market is stabilizing. But the brighter U.S. data had a dark underbelly that some strategists said would limit market gains, as it reinforced expectations that the economy is strong enough for the Fed to begin tapering its quantitative easing (QE) as early as next month. That could draw more capital out of emerging countries, whose markets have felt the pinch in recent sessions.
Singapore Finance Minister Tharman Shanmugaratnam said on Friday that it would not be in anyone's interest for very low global interest rates to continue indefinitely, as this leads to financial imbalances. "The tapering of QE and tightening of U.S. monetary policy, when it eventually occurs, will not be a bad thing for the region's economies," Tharman told a banking conference in