Morning Bid: Global market sunshine to pierce China clouds
By Jamie McGeever
(Reuters) — A look at the day ahead in Asian markets.
Trading in Asia on Friday is shaping up to be a battle between global market strength on one side, and local caution on the other, particularly surrounding the two regional powerhouses China and Japan.
U.S., European and world stocks as measured by the MSCI All-Country index roared to record highs again on Thursday, spurred by — what else? — another surge in chip stocks. Hopes that the Fed and ECB could soon start cutting rates also boosted sentiment.
New highs for the S&P 500 and Nasdaq, a weaker dollar and lower U.S. Treasury yields should be a positive cocktail for Asian stocks. The MSCI Asia ex-Japan index will have its seventh weekly rise in eight if it avoids a 1% decline on Friday.
But concern over China's economy and deepening U.S.-Sino trade tensions are never far from the surface, and they bubbled up again on Thursday.
In Japan, meanwhile, the Nikkei slumped 1% after the yen clocked its biggest rise of the year on mounting speculation that the Bank of Japan could end negative interest rates as soon as this month.
The Nikkei has touched record highs recently so some profit-taking is to be expected. Similarly, U.S. futures market data show speculative short positions in the yen are the largest in six years, so a bout of short covering was always likely.
Japan dominates the Asian economic calendar on Friday, with the latest household spending, bank lending, trade and current account data all scheduled for release.
The news flow around China over the last 24 hours hasn't been particularly bullish for asset prices.
S&P Global warned that China's credit rating could be cut if its economic recovery remains weak or is driven largely by extensive
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