Asian stocks pulled ahead on Friday after U.S. data continued to cast the economy in a positive light, while the dollar was on the defensive against major peers.
Europe is set to follow suit, with financial spreadbetter IG expecting Britain’s FTSE 100 to open up 0.05 percent, and Germany’s DAX to start the day 0.3 percent higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan extended gains to 0.7 percent to a three-week high. The index was on track to rise 2.7 percent this week.
Japan’s Nikkei 225 closed up 0.4 percent, buoyed by prospects of Tokyo delaying a sales-tax hike, helping to extend gains for the week to 1.5 percent.
China’s CSI300 and Shanghai Composite indices both erased earlier losses to trade little changed, as the market digested April industrial profits data. The former is set for a weekly decline of 0.4 percent and the latter is headed for a flat finish.
While profit growth across industrial firms slowed in April from March, oil refiners’ profits rose more than 80-fold in the January-April period from a year earlier, and steel mills saw a 42 percent gain.
The Hong Kong Hang Seng index staged a strong turnaround with a 0.8 percent rise, setting it up for a jump of 2.9 percent for the week.
The Dow Jones Industrial Average inched down 0.1 percent and the S&P 500 ended flat overnight after rising strongly for two days as advancing utilities offset declines in materials, banks and other cyclical industries.
U.S. data on Thursday showed durable goods orders, pending home sales and initial jobless claims coming in strong, while capital goods orders and the Kansas City Fed manufacturing survey were weak.
“The markets have been attentive to clues on U.S. economic conditions. Positive data will signal that conditions may be ripe for a rate hike as soon as in the June Federal Open Market Committee (meeting),” said Bernard Aw, market analyst at IG in Singapore.
“Market participants will be hyper-sensitive to U.S. data, with next week’s inflation data and employment data to be scrutinized,” he said.
The dollar held steady at 109.70 yen after losing 0.4 percent overnight. It is on track for a 0.4 percent fall for the week.
The euro trod water at $1.1197 following Thursday’s 0.3 percent gain, but is set for a weekly loss of 0.2 percent.
The dollar index was nearly flat at 95.136 after slipping 0.3 percent overnight, pulling away from a two-month high of 95.661 scaled on Wednesday. It’s poised for a 0.2 percent loss for the week, but up 2.2 percent this month.
The greenback had rallied earlier in the week on growing expectations that the Federal Reserve will raise interest rates as soon as June or July, supported by a series of comments from Fed officials seemingly backing such a move.
The financial markets are now looking to the revisions of U.S. first quarter GDP data and comments from Fed Chair Janet Yellen at a Harvard University-sponsored event later on Friday.
“Given the uniformity of comments from policymakers, we don’t think Yellen will throw cold water on rate hike expectations and could in fact reinforce them,” wrote Kathy Lien, managing director of FX strategy at BK Asset Management.
“Economists are also looking for first quarter GDP growth to be revised higher so today’s pullback in the dollar should be temporary.”
The Australian dollar slipped 0.1 after rising overnight on a modest upgrade in domestic capex data. The Aussie, which fell to a near three-month low of $0.7145 on Tuesday amid a slide in commodities, was last down 0.1 percent at $0.7233.
In commodities, crude oil went into consolidation mode after prices hit $50 a barrel overnight for the first time in seven months.
Brent crude was down 0.8 percent at $49.21 a barrel after surging to as high as $50.51 on Thursday. It’s headed for a 1 percent gain for the week.
U.S. crude also slipped 0.7 percent to $49.14 after climbing to as high as $50.21 in the previous session, and is set for a weekly rise of 2.9 percent.
Wildfires in Canada’s oil sands area, unrest in the Nigerian and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela have knocked out nearly 4 million barrels per day in immediate production, sparking a buying frenzy in crude futures.
The rise in risk appetite this week has weighed on gold, with the precious metal headed for its biggest decline in nine weeks.
Spot gold recovered 0.1 percent to $1,221.75 per ounce, close to an eight-week low of 1,211.30 seen earlier in the session, and on track for a slide of 2.4 percent for the week.