By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Japanese stocks led most Asian markets higher Friday, cheering gains on Wall Street and a weakened yen, while Chinese stocks retreated amid concerns about liquidity conditions.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.98% was the region’s strongest performer, jumping 2.2% as the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.1275% briefly climbed above the ¥99-level.
Also climbing, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.05% gained 0.9%, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.31% added 1.1% and Taiwan’s Taiex rose 0.8%.
Reversing early gains, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.19% dropped 0.2% and China’s Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.0092% gave up 0.5%.
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The region’s broad advance follow a period of uncertainty surrounding the Federal Reserve’s bond-purchase program, with emerging markets in particular hit by worries that reduced stimulus from the U.S. central bank would spur foreign fund outflows from the region.
ING Financial Markets economist Tim Condon said a tapering of the $85 billion-a-month in Fed stimulus could result in a rapid repricing of U.S. Treasury yields, lifting the 10-year yield by about 1.50 percentage point in about two quarters.
However, “once it’s over, the economic fundamentals ... will reassert themselves as the drivers of financial-asset prices. We’re not there yet, and contagion could still cause a balance-of-payments crisis in an emerging market with a too-large current-account deficit,” Condon said.
Friday’s performance helped the Nikkei Average and the S&P/ASX 200 erase losses they had accumulated earlier in the week. But the Shanghai Composite, the Hang Seng Index and the Kospi suffered losses of between 0.5% and 2.9%.
Stock gains in Tokyo were spread across sectors. Kawasaki Heavy Industries Ltd. /zigman2/quotes/206655821/delayed JP:7012 -2.86% /zigman2/quotes/202288565/composite KWHIF +8.05% added 4.9%, Kobe Steel Ltd. /zigman2/quotes/207391157/delayed JP:5406 -1.30% rose 4.6%, Toshiba Corp. /zigman2/quotes/205628942/delayed JP:6502 +0.63% /zigman2/quotes/204149068/composite TOSYY +0.42% advanced 4.2%, Nissan Motor Corp. /zigman2/quotes/208298710/delayed JP:7201 +0.20% /zigman2/quotes/207656007/composite NSANY +2.70% finished 3.4% higher and Sumitomo Mitsui Financial Group Inc. /zigman2/quotes/203656770/delayed JP:8316 -0.03% /zigman2/quotes/206471416/composite SMFG 0.00% climbed 2.7%.
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A Reuters report Friday cited a survey results as showing that local manufacturers’ optimism rose to the highest level in three years.
The region’s broad advances followed a higher finish for the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.03% , which snapped a six-day losing streak overnight after a monthly average of jobless claims fell to a more than five-year low in the U.S., and as manufacturing Purchasing Managers’ Index readings from China and Germany indicated expansion.
“The fact that the U.S. and European recoveries are improving (albeit fractionally) is a good foundation for global markets, but investors firstly have to get through the removal of the price distortions that quantitative easing created,” said Perpetual investment market-research chief Matthew Sherwood.
Meanwhile, Chinese stocks fell amid worries over tightening liquidity.
China Merchants Bank Co. /zigman2/quotes/209899244/delayed HK:3968 -1.02% /zigman2/quotes/210188047/delayed CN:600036 -1.18% /zigman2/quotes/208876947/composite CIHKY +4.43% lost 3.2% in Shanghai and 1.1% in Hong Kong on its planned rights share issue to raise about 34.9 billion yuan ($5.7 billion).
Other mid-sized banks also declined, with Industrial Bank Co. /zigman2/quotes/209353019/delayed CN:601166 -0.05% losing 2% and China Minsheng Banking Corp. /zigman2/quotes/203910009/delayed CN:600016 +0.26% /zigman2/quotes/200749234/composite CMAKY +2.65% shedding 1.5% in Shanghai, while Ping An Bank Corp. /zigman2/quotes/206600939/delayed CN:000001 -1.26% dropped 3% in Shenzhen.
Some Hong Kong-listed stocks found buying support after reporting earnings. Kunlun Energy Co. /zigman2/quotes/207929595/delayed HK:135 +1.20% /zigman2/quotes/209475075/composite KLYCY -0.71% added 3.2% after the company posted a 5% increase in its first-half profit, while Henderson Land Development Co. /zigman2/quotes/208724890/delayed HK:12 -0.46% /zigman2/quotes/200560946/composite HLDCY -0.24% advanced 2.6% despite a modest decline in its profits.