Asia: Stocks mixed after strong Wall Street, dollar gains on US data

[SINGAPORE] Asian shares were mixed and the US dollar extended its overnight gains on Friday on signs of strong US economic growth, while the euro inched up after sliding overnight on data suggesting slowing growth in Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.15 per cent, as investors balanced positions on the last day of the month and quarter. The benchmark is up almost 13 per cent for the quarter.

China's CSI 300 index added 0.25 per cent, putting it on track for a 4.1 per cent quarterly rise.

Activity in China's manufacturing sector expanded to 51.8 in March, an official survey showed, beating expectations for 51.6. The services sector rose to 55.1 from 54.2 in February. The 50-point mark separates growth from contraction.

The data comes as US President Donald Trump foreshadowed a tense meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses.

Mr Trump also tweeted that the meeting, which is also expected to cover differences over North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one".

Vice-foreign minister Zheng Zeguang said on Friday that China does not have a policy to devalue its currency to promote exports, and neither does China seek a trade surplus with the United States.

"The Trump comments on Xi aren't material, although they may weigh slightly on Asian sentiment, with trade discussions, being a known risk in the increasingly protectionist Trump era," said Angus Gluskie, managing director of White Funds Management in Sydney.

Japan's Nikkei jumped 0.6 per cent after Japanese core consumer prices rose 0.2 per cent in February. While that is the fastest annual pace in nearly two years, it is still a far cry from the central bank's 2 per cent target.

The Japanese benchmark is set to end the first quarter up 0.3 per cent.

The South African rand dropped to a seven-week low after President Jacob Zuma sacked finance minister Pravin Gordhan in a cabinet reshuffle after days of speculation that has rocked the country's markets and currency, replacing him with home affairs minister Malusi Gigaba.

A statement from the president's office just after midnight on Thursday said Zuma had also appointed Sfiso Buthelezi as Deputy Finance Minister replacing Mcebisi Jonas.

The weakened rand saw the dollar up 0.9 per cent at 13.4075 rand, on track to end the week almost 8 per cent higher.

Overnight, all three major Wall Street indexes closed about 0.3 per cent higher after fourth-quarter annualised growth in US gross domestic product was revised up from the previously reported figure. Consumer spending growth was also revised up.

The upbeat data also helped lift the US dollar.

The US dollar index, which tracks the greenback against a basket of six peers, rose 0.1 per cent to 100.51, after hitting a two-week high on Thursday. Despite this week's gains - it is up almost 1.7 per cent since Monday's four-month low - the greenback is set to end the quarter 1.7 per cent lower.

The US dollar added 0.2 per cent to 112.125 yen after Thursday's 0.8 per cent jump, but is heading for a 4 per cent quarterly decline.

Nervousness could return to US markets over concerns about the ties between Mr Trump's presidential campaign and Russia. Mr Trump's former national security adviser, Michael Flynn, has discussed with congressional committees the possibility of giving testimony in their investigations of potential ties between the Trump campaign and Russia, his lawyer said on Thursday.

"Looking forward, this is important," Mr Gluskie said.

"The stability of the Trump administration appears to be critical to markets. As markets have shown over recent weeks, if Trump's position is undermined by security issues or a reticent right wing Congress, investors are likely to respond negatively."

The euro inched up slightly to US$1.068 in an effort to make up some of Thursday's 0.8 per cent tumble. The common currency is on track to post a gain of one per cent for March and 1.5 per cent for the quarter.

Data showed German and Spanish consumer inflation slowed more than expected in March on a pull back in oil prices, disappointing investors who were hoping for a winddown of the European Central Bank's monetary stimulus.

In commodities, oil prices retreated early on Friday.

US crude slipped 0.2 per cent to US$50.24 a barrel. On Thursday, it closed 1.7 per cent higher after zipping to a three-week-high earlier in the session after Kuwait backed an extension of Opec production cuts.

It is heading for a 6.4 per cent loss for the week.

Global benchmark Brent lost 0.25 per cent to US$52.83 and is on track for a 7 per cent decline for the quarter.

Gold pulled back 0.1 per cent to US$1,241.41 an ounce, extending Thursday's 0.7 per cent loss on the dollar's strength, but remains set for a 7.8 per cent quarterly gain.

REUTERS