Japanese stocks grow, dollar falls as investors ‘glass half full’ seen by Reuters

By Tom Westbrook

SINGAPORE (Reuters) – Japanese stocks were up six months and the dollar was under pressure on Thursday as investors positively plucked from recent economic data and bets on China and the United States with their trading sales at a crucial weekend meeting .

MSCI’s broadest index of shares in Asia-Pacific outside Japan () was up 0.1%, while gains in semiconductor manufacturers drove Japan’s Nikkei () 1.8% higher after a six-month peak. ()

The rally follows Wednesday’s gains in Europe and on Wall Street – which left the S&P 500 () within a whisker of a high closed record. But future prices suggest that the latest round of optimism may lose steam in the European day.

Euro STOXX 50 futures () were down 0.1% last year, futures () were down 0.7% and S&P 500 futures () were down 0.1%.

“People see the glass half full, and test the waters,” said Moh Siong Sim, currency analyst at Bank of Singapore.

The entire week saw a selloff in the U.S. bond market, as investors earned the largest 10-year paper auction, raising returns enough to trigger a sharp pullback in gold, as well as falling in the yen as currents come from Japan.

At the same time, the number of daily new COVID-19 infections in the United States seems to stabilize around 55,000 and an unexpected jump in consumer prices over the past month seems to boost confidence in the recovery.

On Thursday, US 10-year () yields a touch to 0.6638%, gold stood at $ 1,926 per ounce and the dollar was back under pressure against the euro. [GOL/]

But the scale and pace of gains in the stock market are starting to raise some concerns. Analysts at OCBC in Singpore are worried that a stress index they launched in April has done nothing but tumble since its inception.

“Market stress … has fallen to such a low level that we are beginning to question when we are missing out on something,” wrote OCBC economist Wellian Wiranto.

“With that in mind, we are zooming in on US-China tensions, which may begin to function more prominently,” he said.

The next flash point is likely to be Saturday, when top officials will gather to monitor the progress of the Phase 1 trade pact.

White House economic adviser Larry Kudlow said this week that the deal “was good at the moment”, remarks that helped the yuan to a five-month high on Thursday in a sign of market confidence.

But China has been left behind in purchasing goods and energy and, Bloomberg News reported on Wednesday, is likely to increase other areas of the two-country growing conflict during trade talks.

DOLLAR DRUK

Elsewhere, the upbeat sentiment held broad pressure on the dollar. [FRX/]

Markets are still waiting forever for a breakthrough in wrestling over the next U.S. incentive package. Small sign of progress is not helpful for US economy and helped push euro () back above $ 1.18 and sterling to edge forward.

The Australian dollar came forward to better-than-expected job numbers – despite the fact that unemployment rose above a million for the first time. It was last at $ 0.7171.

Australia was also the outlier in regional stock markets, with sales of communications giant Telstra (AX 🙂 following a profit attack on the index ().

Korea’s Kospi () led gains in other markets outside Japan, up 0.7% to a two-year high.

In commodities, oil mostly complains about solid gains made during the day when a drop in U.S. crude inventories gave hope that demand for fuel would recover. [O/R]

Brent crude futures () were last 0.2% softer at $ 45.33 per barrel, while US crude () dipped by the same margin to $ 42.60 per barrel.

US weekly unemployment claims are on the horizon around 1230 GMT and investors expect a modest downtrend to continue.