Growing hopes that the Federal Reserve and other central banks are close to cutting interest rates helped push Asian stocks higher Friday.
Traders tracked gains in New York as well as records in London and Frankfurt as they cheered fresh US data indicating the labour market was beginning to soften, giving central bankers room to ease monetary policy.
The forecast-beating figures showing that unemployment claims rose to their highest level since August followed last Friday’s news that far fewer new posts were created in April than expected.
US Treasury bond yields, a proxy for interest rates, moved lower.
The readings soothed worries that borrowing costs would remain elevated through the year after a series of above-estimate inflation readings in the first four months.
Still, speculation is growing that the Fed will cut rates in September, though analysts urged caution as decision-makers were keen to see evidence that prices are being brought under control.
San Francisco Fed chief Mary Daly said that while the current policy was keeping a rein on the economy, it could take “more time” for inflation to come down to officials’ two percent target.
“The data is noisy and thus we cannot yet say that a change in trend has occurred, but the next few weeks are going to be important, further increases from here would encourage the market to price a new Fed easing cycle with more confidence,” said National Australia Bank’s Rodrigo Catril.
Earlier Thursday, the Bank of England hinted that it could shift lower in the summer after keeping rates on hold at a 16-year high.
While inflation came in slightly hotter than anticipated, BoE boss Andrew Bailey said he was “optimistic that things are moving in the right direction”.
The European Central Bank is expected to cut its rates in June.
The positive developments saw markets in London and Frankfurt finish at record highs.
And with Wall Street enjoying a strong day, Asian investors went into Friday on a high.
Hong Kong continued an impressive run that has seen it enter a bull market after climbing more than 20 percent from its January lows, while there were also gains in Tokyo, Sydney, Seoul, Singapore, Taipei and Manila.
However, Shanghai and Wellington edged down.
Oil prices extended gains as investors tracked developments in the Middle East, with Hamas on Friday saying its team at Gaza ceasefire talks in Cairo had left, adding that the “ball is now completely” in Israel’s hands.
State-linked Egyptian outlet Al-Qahera News reported Thursday that representatives of both camps had left after two days of negotiations aimed at finalising a ceasefire deal.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.6 percent at 38,311.63 (break)
Hong Kong – Hang Seng Index: UP 1.0 percent at 18,727.56
Shanghai – Composite: DOWN 0.4 percent at 3,140.77
Dollar/yen: UP at 155.73 yen from 155.47 yen on Thursday
Euro/dollar: DOWN at $1.0774 from $1.0785 on Wednesday
Pound/dollar: DOWN at $1.2511 from $1.2524
Euro/pound: UP at 86.11 from 86.09 pence
West Texas Intermediate: UP 0.5 percent at $79.66 per barrel
Brent North Sea Crude: UP 0.4 percent at $84 per barrel
New York – Dow: UP 0.9 percent at 39,387.76 (close)
London – FTSE 100: UP 0.3 percent at 8,381.35 (close)
