Asia: Shares ease after run of gains; US dollar, oil recover

[SINGAPORE] Asian stock markets took a breather on Friday from their recent surge as investors booked profits, while the US dollar inched up after Thursday's slide and optimism over possible renewed supply cuts by Opec lifted oil prices.

MSCI's broadest index of Asia-Pacific shares outside Japan pulled back 0.1 per cent, on track to end the week up 1.3 per cent, its fourth straight weekly gain.

Overnight, Wall Street lost momentum, with the Dow Jones Industrial Average barely eking out its sixth straight record high, while the S&P 500 and Nasdaq snapped a seven-day winning streak as investors slowed buying to digest recent gains.

US President Donald Trump's first solo news conference on Thursday, where he took a combative stance against the news media and deflected questions about contacts between his presidential campaign and Russian operatives, also gave investors pause.

"Apart from a reflection of the slight easing in US market momentum after several strong days, investors are making some greater allowance for rising risk," said Angus Gluskie, managing director of White Funds Management in Sydney.

"Trump's erratic performance in the press conference has had a destabilising influence on investor confidence." The arrest of Samsung Group chief Jay Y Lee over his alleged role in a government corruption scandal is also a source of concern, Mr Gluskie said.

Until Thursday, the index had beaten its previous intraday highs for seven consecutive sessions, and closed at 19-month highs in the past two.

A batch of positive economic data out of Asia this week, driven by improving exports and rising commodity prices, has bolstered shares, although concerns linger that any protectionist threats posed by US President Donald Trump could reverse the recovery.

On Friday, Singapore revised its fourth-quarter gross domestic product growth sharply higher. Earlier in the week, Taiwan raised its 2017 economic growth target to a three-year high, Indonesia's January exports rose at the fastest pace in more than five years and China's January inflation picked up by more than expected to near six-year highs.

Japan's Nikkei slid 0.6 per cent, set to close 0.7 per cent lower for the week. Australian shares were down 0.1 per cent, shrinking the week's gains to 1.5 per cent.

Chinese shares slipped after earlier touching a near two-month high after the securities regulator said that, starting Friday, it will relax certain rules on stock index futures trading as the government starts to gradually unwind restrictions imposed during the 2015 stock market crash.

The CSI 300 index lost almost 0.1 per cent after gaining as much as 0.5 per cent, on track for a weekly advance of 0.7 per cent.

Hong Kong shares dropped 0.3 per cent, but are still poised to close up almost 2 per cent for the week.

The US dollar edged up tentatively, but remained near the one-week low hit on Thursday, when it posted its biggest one-day drop in more than two weeks, as uncertainty about the timing of the next Federal Reserve rate hike offset the impact of stronger economic data.

Manufacturing activity in the US Mid-Atlantic region surged to its highest in 33 years, housing data indicated a recovery in the sector was on track, and weekly jobless claims pointed to a labour market that continues to tighten.

But traders concluded that Federal Reserve Chair Janet Yellen's economic testimony before Congress on Wednesday didn't offer enough conviction that the central bank would raise rates at its next meeting in March.

The US dollar climbed almost 0.2 per cent on Friday to 113.42 yen, up by the same percentage for the week. It lost about 0.8 per cent on Thursday.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was up almost 0.1 per cent at 100.50, on track to end the week 0.3 per cent lower. It tumbled 0.7 per cent on Thursday.

The euro was little changed at US$1.0671 on Friday, retaining Thursday's 0.7 per cent gain, and set to end the week 0.3 per cent higher.

The stronger US dollar on Friday weighed on gold, which slipped 0.1 per cent to US$1,237.20 an ounce. But the precious metal remains poised for a 0.3 per cent rise for the week.

Oil prices built on Thursday's gains on positive sentiment over reports that the Organization of Petroleum Exporting Countries may consider extending its oil supply-reduction pact with non-members and may even apply deeper cuts if inventories don't fall to a targeted level.

For now, that optimism appears to be winning the tug of war with concerns over a rise in US production, but that worry is set to leave oil prices with a weekly loss.

US crude added 0.2 per cent to US$53.46 a barrel, but is headed for a decline of 0.7 per cent for the week.

Global benchmark Brent crude advanced 0.2 per cent to US$55.76, narrowing the week's loss to 1.7 per cent.

REUTERS