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 Singapore.
Some Asian investors are betting that North Asian currencies such as the South Korean won and the Taiwan dollar will fare better than their Southeast Asian counterparts as the Fed pares its stimulus. The Korea Composite Stock Price Index (KOSPI) .KS11 rose 1.2 percent, as fears about the impact of Fed policy on emerging markets eased.
"The market is responding well to the upbeat U.S. and European data, while concerns about India and Indonesia have eased," said Samsung Securities analyst Lim Soo-gyun.
DOLLAR EDGES HIGHER
The dollar .DXY rose about 0.1 percent against a basket of currencies to 81.551. On Thursday, it broke through initial resistance at 81.604, its 200-day moving average, to hit a one-week peak of 81.719. The dollar rose 0.3 percent against the Japanese currency to 98.96 yen after hitting 99.10 yen earlier on the EBS trading platform, its highest since August 5, while the euro slipped about 0.1 percent to $1.3349.
In commodities trading, copper prices added 0.1 percent to $7,330 a ton, supported by the Chinese manufacturing data that suggested demand from the world's second-biggest economy and top metals consumer could pick up.
Gold slipped slightly to $1,376.41 per ounce, headed for a small loss for the week. The precious metal was also buoyed by the China PMI but was at the same time pressured by upbeat global economic data and expectations that the U.S. Federal Reserve will soon taper its stimulus.
Brent crude prices rose 0.3 percent to $110.18 a barrel. Rising political tensions in the Middle East and North Africa have bolstered oil prices this week, even as reports of some Libyan ports readying for exports eased supply concerns.