Asian shares on Friday held near six-and-a-half-month highs after upbeat US data overnight and optimism in the tech sector helped calm some of the jitters sparked by the US Federal Reserve’s cautious outlook on the world’s biggest economy.
Markets showed some signs of fatigue during the afternoon session as focus turned to a fresh round of Sino-US trade talks.
MSCI’s broadest index of Asia-Pacific shares outside Japan was nearly flat, trimming earlier gains, but still not far off six-and-a-half-month highs reached earlier in the day.
The info tech sector rose 0.8 percent, while Japan’s Nikkei average added 0.1 percent.
Many markets took on a more cautious tone after the early session gains, likely as they awaited another round of Sino-US talks.
The MSCI Asia Pacific Index rose 0.4 percent to 161.36, up 1.5 percent for the week.
The weighted index on the Taiwan Stock Exchange closed up 29.52 points, or 0.28 percent, at 10,639.07, up 2 percent for the week.
The Shanghai Composite, the blue-chip CSI 300 and Hong Kong’s Hang Seng on Friday dropped between 0.1 and 0.4 percent each.
Japan’s TOPIX on Friday edged up 0.2 percent by the close in Tokyo. Hong Kong’s Hang Seng fell 0.4 percent and the Shanghai Composite was flat.
Australia’s S&P/ASX 200 Index climbed 0.5 percent.
Bloomberg on Friday reported that US officials downplayed the prospect of an imminent trade deal with Beijing, just as a US trade delegation headed by US Trade Representative Robert Lighthizer and US Secretary of the Treasury Steven Mnuchin is set to visit China on Thursday and Friday.
“The main market reaction to the Fed’s announcement was that it has become a consensus that the Fed’s next move is a rate cut,” Sumitomo Mitsui Trust Asset senior manager Naoya Oshikubo said.
“As economic data from China and elsewhere has not bottomed out yet, investors will be looking at economic fundamentals for now. If there are improvements, then markets could roll back expectations of a Fed rate cut,” he said.
DoubleLine Capital LP chief executive Jeffrey Gundlach, who is often dubbed the “Bond King,” on Thursday said that the stock market “likes the fact that they [the Fed] aren’t going to give them any problems” for now.
However, he added that the Fed’s cautious stance on raising rates could backfire by creating uncertainty in the economy and hurt its credibility.
Additional reporting by CNA
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