Chinese stocks surged on Thursday after a week-long break as they played catch-up with a global rally, while most regional markets retreated with Japanese equities hitting the skids on weak data.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.5 percent. The index was on track to snap a six-day winning streak that took it to a 1-1/2 month peak this week, propelled by a global surge in risk appetite as expectations of the Federal Reserve hiking interest rates this year ebbed.
Japan’s Nikkei .N225 dropped 0.9 percent after weak Japanese machinery orders and a stronger yen soured sentiment. Hong Kong’s Hang Seng .HSI fell 0.8 percent, South Korea’s Kospi .KS11 shed 0.2 percent while Australian shares gained 0.2 percent .
Chinese stock markets, which have been hit by wild swings in recent months due to growth and policy worries, rallied after re-opening following an extended break since the end of September. Shanghai stocks .SSEC rose 3.6 percent.
“Chinese shares got a boost from the global market, especially the U.S. market,” said Xiao Shijun, an analyst at Guodu Securities in Beijing.
Overnight on Wall Street, the S&P 500 .SPX soared to a three-week high thanks to a bounce in biotechnology companies. The index has gained 2.3 percent so far this week. [.N]
The Fed opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China. Last week’s soft U.S. non-farm employment report prompted markets to scale back expectations that the Fed would hike rates later this year.
Investors will have an opportunity to gauge the thinking of U.S. central bank officials when the minutes of the Fed’s September meeting, at which it opted not to hike rates, are released later in the day.
St. Louis Fed President James Bullard, Minneapolis Fed President Narayana Kocherlakota and San Francisco Fed President John Williams will also speak later on Thursday.
The dollar has wobbled since the weak U.S. jobs data lessened the prospects of a near-term Fed rate hike. It was on track to post its third straight day of losses against the yen, which received a fresh lift on Wednesday after the Bank of Japan kept monetary policy steady.
The greenback dipped 0.1 percent to 119.84 yen JPY=, down from the week’s high of 120.575 on Tuesday.
The euro rose 0.2 percent to $1.1257 EUR=, trimming some of the losses suffered overnight on weaker-than-expected German industrial production data.
Upbeat British industrial output data boosted the sterling, which hovered near a two-week high of $1.5340 GBP=D4 hit the previous day.
Commodity currencies like the Australian and Canadian dollars also remained in good heart against the greenback, as the turn in Fed policy expectations drove up global risk appetite and prices of commodities including crude.
The Aussie traded at $0.7172 AUD=D4 after reaching a near three-week high of $0.7235 overnight. The currency got some support after the Reserve Bank of Australia left rates steady earlier this week and struck a less dovish tone than some had expected.
Crude resumed their rise after a U.S. government report showing a large inventory build briefly halted its rally. U.S. crude CLc1 was up 0.3 percent at $47.95 a barrel, edging back towards a 2-1/2 week high of $49.71 struck on Wednesday. Brent rose 0.3 percent to $51.47 a barrel LCOc1.