Asian stocks joined global peers and rose on Friday while safe havens such as government bonds and the yen were on the defensive amid hopes for easing US-China trade tensions and as firm US economic data increased risk appetites.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4%, putting it on track for a 2.2% weekly gain - which would make it the best week since mid-June.
The Shanghai Composite Index was up 0.2% and Hong Kong’s Hang Seng rose 0.6%.
Australian stocks gained 0.6%, South Korea’s KOSPI climbed 0.3% and Japan’s Nikkei advanced 0.6%.
Global equity markets welcomed news that the United States and China agreed on Thursday to hold high-level talks early in October, raising hopes for substantial progress in de-escalating their long, bitter trade conflict.
Risk sentiment was further improved by upbeat US data on Thursday.
US private payrolls increased in August at their fastest pace in four months, according to ADP. Separately the US services industry rebounded last month to its fastest expansion since February, according to the Institute for Supply Management’s non-manufacturing purchasing managers index (PMI).
“The strong US data are the main part of the latest turn in markets as they are key factors impacting equities and US yields, therefore determining how long this ‘risk on’ phase will last,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
On Thursday, the Dow added 1.4%, the S&P 500 climbed 1.3% and Nasdaq rose 1.75%.
Ishikawa at IG Securities said Friday’s US August jobs report “will get more attention than usual as it could further fuel the risk-on phase, which in turn would boost the dollar.”
The non-farm payroll report is expected to show an increase of 158,000 and the unemployment rate holding steady at 3.7%.
The dollar stood at 107.070 yen after climbing to a one-month high of 107.235 overnight. The greenback has gained about 0.7% against the Japanese currency this week as the decrease in risk aversion reduced demand for the safe-haven yen.
The pound hovered near a six-week peak of $1.2353 scaled the previous day on hopes that Britain could avoid exiting the European Union without a deal.
Sterling had fallen to a three-year low of $1.1959 midweek after British Prime Minister Boris Johnson stoked fears of a no-deal Brexit.
The euro was steady at $1.1035 after rising 0.5% overnight, when it was lifted by sterling’s bounce.
The dollar index against a basket of six major currencies was little changed at 98.420 after pulling back from a one-week low of 98.085 the previous day, thanks to a rise in US Treasury yields.
US Treasuries fell in price and their yields rebounded from multi-year lows as investors moved out of safety assets into equities.
The 10-year Treasury yield was at 1.536%, having risen from a three-year trough of 1.428% plumbed midweek on soft economic data and Sino-US trade worries.
Japan’s 10-year government bond yield climbed 3 basis points to minus 0.245%, putting some distance between a three-year low of minus 0.295% set earlier this week.
The Australian dollar traded close to a one-month peak of $0.6830. It has gained more than 1% this week amid the thaw in US-China trade tensions and tempered prospects for an immediate interest rate cut by the Reserve Bank of Australia.
Brent crude oil futures were little changed at $60.96 per barrel, losing some steam after posting strong gains over the past two sessions.
Brent had climbed to a one-month peak of $62.40 per barrel on Thursday on a decline in US crude inventories and eased trade war worries.