Stocks meander higher, but virus fears hold optimism in check
Asian stock markets followed Wall Street higher after US regulators removed some limits on banks' ability to make investments.
Asian stock markets ground higher on Friday, but are set to end a choppy week with only slight gains as surging coronavirus infections cast a shadow over encouraging economic data and checked hopes for a swift global recovery.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent, for a weekly gain of around 0.7 per cent. Japan's Nikkei rose 1.3 per cent to sit 0.4 per cent higher for the week.
Bulls seem to have the upper hand in currency markets, with the US dollar down 0.3 per cent for the week, and riskier currencies such as the Australian dollar marginally ahead.
US stock futures were 0.1 per cent higher in afternoon trade in Asia, while European futures pointed to small Thursday gains extending. German DAX futures, Britain's FTSE futures and EuroSTOXX 50 futures all rose about 1per cent.
"We're stuck in a bit of a range," said Shane Oliver, chief economist at AMP Capital in Sydney. "There's a degree of optimism that any second wave will be offset by stimulus ... but if we have to go back to a renewed lockdown then it's a different story, and markets face a lot more downside risk."
The moves followed a bumpy session on Wall Street, which finished in positive territory after a late surge led by banking stocks.
Still, volumes were light and plenty of headwinds remain.
The governor of Texas paused the state's reopening as Covid-19 infections and hospitalizations surged and the United States set a new record for a one-day increase in cases.
Localised restrictions to slow the virus have now been re-imposed in parts of Lisbon in Portugal, western Germany, Australia's Victoria state and Beijing. Australia's biggest grocer also reinstated buying limits on toilet paper after another rush in stores.
The US Senate also passed legislation that would impose mandatory sanctions on people or companies that back efforts by China to restrict Hong Kong's autonomy, yet another potential Sino-US flashpoint.
To become law it must also pass the House and be signed by President Donald Trump. Support for pro-democracy protests in Hong Kong has slipped, but retains backing of a slim majority, a survey conducted for Reuters showed.
Hong Kong's Hang Seng index fell 0.6per cent in on Friday, after being closed for a holiday on Thursday. Markets in China and Taiwan remain closed.
The US Treasury market was quiet, with the yield on benchmark 10-year Treasuries steady at 0.6807per cent. Gold held steady at $1,759.81 an ounce.
The tug of war between bulls and bears this week has sent the S&P 500 ahead by as far 1.8 per cent and down by as much as 2.4 per cent on the week, with Thursday's gains leaving it flat.
Foreign exchange markets have likewise stalled, as the virus' progress dents confidence in bets on further gains in hard-running riskier currencies.
"Having risen for three straight months, some payback may be due for stocks and currencies in July," strategists at Singapore's DBS Bank said in a note on Friday.
"We would avoid currencies - Indonesian rupiah, Australian dollar and New Zealand dollar - that appreciated most in June and Q2."
Moves in majors were small on Friday, with the Aussie steady at $0.6889, up 0.8 per cent for the week, and the kiwi edging ahead to $0.6444, for a 0.6 per cent weekly gain. The Aussie has rallied 25 per cent from March lows and the kiwi 18 per cent.
After a mixed bag of US data overnight, markets are looking for reassurance from European confidence surveys and US spending data due later on Friday.
Oil prices, a barometer of energy consumption and so the global growth outlook, edged ahead to hold steady for the week.
US crude futures were last up 1.3 per cent or 49 cents to $39.21 per barrel and Brent futures rose 1.4 per cent to $41.62 per barrel. - Reuters
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