Asian Shares Rebound, Economic Optimism Subdued

Asian shares bounced back from a three-month low on Friday’s trade. This came after a late-day rally on Wall Street. 

Chinese shares fell on Thursday, near to a three-month low hit earlier in the month. This week, the European Union joined Washington’s allies in imposing sanctions on officials in China’s Xinjiang region. This was over allegations of human rights abuses. These allegations prompted retaliatory sanctions from Beijing.

Tensions between the West and China overshadowed optimism about global economic recovery.

Yasutada Suzuki, head of emerging market investment at Sumitomo Mitsui Bank, said recent falls in Chinese shares have been worrying. However, there’s no change in the fact the Chinese economy is recovering. He said all the sanctions so far have been largely symbolic and should have a little economic impact. However, the Sino-U.S. confrontation is affecting market sentiment, Suzuki said. It could take some time for them to come to any compromise,” he added.

Stocks on The Move

MSCI’s ex-Japan Asia index hit a near three-month low on Thursday before adding 0.37%. The Shanghai Composite Index snapped out of a three-day losing streak and gained 0.78%.

Japan’s Nikkei edged up 0.89% following Wall Street’s rally, driven by cheap, cyclical stocks that were battered by the pandemic.

On Wall Street, the Dow Jones Industrial Average climbed 0.62%, and the S&P 500 added 0.52%. The Nasdaq Composite inched up 0.12%.

Trading was driven more by an end-of-quarter rebalancing of investment portfolios by institutional investors rather than news flow, analysts said. Overnight headlines, though, were mostly supportive of stocks, they noted.

The euro fell as low as $1.1762 overnight, its lowest levels since November. It then licked its wounds at $1.1780.

The greenback also rose to 109.17 yen, from last week’s nine-month high of 109.365 yen. The dollar index gained 2.0% this month, standing near its highest level since mid-November.

Meanwhile, Japan’s Nikkei 225 added 1.63% by 11:06 PM ET (3:06 AM GMT). South Korea’s KOSPI rose 0.70%, and in Australia, the ASX 200 gained 0.44%.

Hong Kong’s Hang Seng Index advanced 0.92%.

China’s Shanghai Composite and the Shenzhen Component rose 1.18% and 1.17%, respectively. Global shares drifted near record highs as signs of economic recovery from the pandemic continued to emerge.

Investors will also continue to keep a cautious eye on the dollar. The safe-haven currency was down on Friday morning but was near four-month highs.