By Ese Erheriene
Japan financial stocks rose Friday, boosted by a global bond selloff after European Central Bank President Mario Draghi hinted the central bank was unlikely to introduce fresh stimulus measures.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +2.55% closed up around 1.5% after opening at a five-day high. Gains were driven by the yen softening against the dollar and the prospect of higher European yields amid signs that inflation is returning to the eurozone.
Investors are awaiting bellwether jobs data from the U.S. later in the global trading day, which could reinforce expectations that the U.S. Federal Reserve will raise rates next week. Futures trading already indicates a 90.8% probability of higher rates, according to data from CME Group.
“The NFP [nonfarm payroll figures] are expected to be high given the extremely high ADP employment figures we have seen this week,” said Woon Tian Yong, an investment analyst at Phillip Futures.
“In my opinion, any number which is not extremely low will not change expectations for a rate hike.”
The yield on 10-year U.S. Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% hit its highest intraday level since mid-December, and was hovering near its steepest range in more than two years. It was last at 2.6012%, up from 2.5980% late Thursday in the U.S.
The momentum will be “contagious in Asia,” said Tim Condon, an economist at ING. Markets will be watching Japanese government bonds, as the yield on the 10-year JGB approaches the upper limit of what analysts call the BOJ’s comfort zone — plus or minus 0.1 percentage point. The yield on the 10-year JGB was last at 0.091% after trading as high as 0.099% earlier Friday, according to Thomson Reuters.
Japan financial companies, which invest heavily in global government bonds, were up sharply on the prospect of improved yields on future investments in the securities. Nomura /zigman2/quotes/206251373/delayed JP:8604 +0.47% rallied 3.6%, Daiwa /zigman2/quotes/207014417/delayed JP:6459 +2.56% gained 2.9% and Dai-ichi Life /zigman2/quotes/208507587/delayed JP:8750 +3.54% jumped 3.5%.
The Japanese currency was last down around 0.4% against the U.S. dollar, making it cheaper for exporters to ship their goods abroad. Among individual shares, Honda /zigman2/quotes/200490352/delayed JP:7267 +3.47% added 1.5%, while Sharp /zigman2/quotes/203224600/delayed JP:6753 +0.90% was 2.7% higher.
“The Nikkei 225 is a very export-driven index and any weakening in the yen is expected to be good news for the index,” said Mr. Woon.
In South Korea, stocks finished slightly higher after earlier hitting a six-session high following the Constitutional Court’s upholding of the impeachment of President Park Geun-hye, permanently removing her from office. The Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.54% closed up 0.3%, roughly where it was before the late-morning announcement.
In the commodities sphere, oil prices were modestly higher in early Asian trading after an overnight slide that saw U.S. crude-oil futures slip below $50 a barrel for the first time this year. Futures have fallen about 7% over the past two sessions, based on U.S. closing prices, as a re-acceleration of U.S. production stoked worries about oversupply.
“Prices will probably come under fire again if today’s U.S. oil-rig report shows [further] growth,” said a crude-oil trader for a Singapore-based company. The closely watched weekly reading from Baker Hughes has been steadily rising in recent months.
Nymex crude-oil futures for April delivery were recently up 32 cents at $49.59 a barrel and May Brent gained 28 cents to $52.47.