Asia: Markets mixed heading into weekend

[HONG KONG] Asian investors remained on edge Friday as the curtain came down on another volatile week for markets with fears of a global trade war playing off against a positive economic outlook.

Investors have swung from optimism to pessimism since last week's controversial move by Donald Trump to throw up tariffs on imports of some metals, with the removal of his moderate secretary of state adding to the unease.

However, the president's agreement to meet Kim Jong Un to discuss North Korea's nuclear programme provided much-needed relief, while a positive jobs and wages report tempered worries interest rates would shoot up.

Attention now turns to the Federal Reserve's monetary policy meeting next week. A rate rise is expected but its statement and new bank boss Jerome Powell's comments will be pored over for clues about future hikes with speculation it could announce three more this year.

"It's shaping up to be arguably one of the most critical central bank policy events in some time as Jay Powell gets set to dictate the course of Fed policy for the remainder of 2018 and beyond," said Stephen Innes, head of Asia-Pacific trade at Oanda.

"Given the enormity of the risk event, traders are getting remarkably anxious awaiting hints on forward guidance, so we should expect interest rate uncertainty to intensify as we near the event horizon."

Wall Street's three main indexes ended mixed, with a drop in US jobless claims providing support, while top White House advisor Peter Navarro, a trade hawk looking to sooth trade war fears, told CNBC the administration planned to work with allies "to make things better for everybody".

STABILITY CONCERNS

However, he added that Mr Trump would soon consider fresh measures against Beijing over its "theft" of US intellectual property.

On Friday, Tokyo ended the morning session 0.2 per cent lower, while Hong Kong slipped 0.3 per cent and Seoul dropped 0.4 per cent.

Singapore was off 0.2 per cent but Sydney added 0.3 per cent and Shanghai 0.2 per cent. Wellington rose while Taipei, Manila and Jakarta all sank.

Further uncertainty has been fanned by reports that Mr Trump is planning to sack his National Security Advisor HR McMaster, just days after Secretary of State Rex Tillerson was ousted and not long since Trump's chief economics advisor Gary Cohn resigned.

The upheaval has led to concerns about instability in the White House and a shift to a more hardline approach to world affairs.

The dollar struggled to make inroads against the yen as investors continue to buy the Japanese unit as a hedge against volatility, but the euro is being weighed by a soft tone from the European Central Bank on its plans for monetary tightening.

Officials at the ECB "have made it clear the ECB still leans dovishly when it comes to that first move in interest rates after the end of (easing) in the next six to 12 months", said Greg McKenna, chief market strategist at AxiTrader.

AFP