Asian shares followed global stock markets higher on Friday after the Bank of England launched a larger-than-expected post-Brexit stimulus package that sent the British pound tumbling.
An overnight rally in crude oil prices also sharpened risk appetites, but some caution before the July US non-farm payrolls report later on Friday limited the gains.
MSCI's broadest index of Asia-Pacific shares outside Japan extended gains to 0.9 per cent, headed for a 0.6 per cent weekly gain. MSCI's world stocks index rose 0.1 per cent on Friday.
Japan's Nikkei advanced 0.3 per cent, on track for a loss of 1.6 per cent for the week.
China's CSI 300 index climbed 0.1 per cent, set to end the week flat. The Shanghai Composite was little changed, poised for a 0.1 per cent weekly gain.
BoE rate cut
The BoE's quarter point rate cut to a record low 0.25 per cent boosted shares in Europe while sending already low global bond yields even further down with British yields hitting record lows as gilt prices rose.
The BoE said it would take “whatever action is necessary” to achieve stability in the wake of Britain's vote to leave the European Union.
“BoE Governor Mark Carney's assessment of the post-Brexit UK economy was very negative, predicting the unemployment rate will rise from 4.9 per cent to 5.5 per cent over the next two years despite the new stimulus,” Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.
“That makes it very likely that further cuts to the policy rate and expansions of the BoE's other easing measures will be forthcoming over the coming months, providing further downside risks to the pound,” he said.
The British pound crawled up 0.2 per cent to $1.3130 after retreating 1.7 per cent overnight.
Treasury yields
The US Treasury 10-year note yield was little changed at 1.4991 per cent after dropping 25 basis points overnight during a broad post-BoE rally in bond markets, which took the 10-year gilt yield to a record low of 0.639 per cent.
Yields on euro zone bonds such as German bunds also tumbled on Thursday as bond prices rose after the BoE news.
Wall Street ended Thursday little changed ahead of the July US nonfarm payrolls report later on Friday which will be scoured for clues to whether it is strong enough to support a Federal Reserve rate hike as early as September.
Economists polled by Reuters expect US employers to have added 180,000 jobs, compared with 287,000 in June.
“Based on our analysis, the payroll growth in July is likely to be pretty strong,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. “I expect a figure above 200,000. That should be positive for the dollar.”
Dollar vs yen
The dollar gained 0.1 per cent to 101.27 yen, on track to fall 0.8 per cent on the week. The euro was steady at $1.1131, set to end the week 0.4 per cent lower.
The dollar index was steady at 95.775 after gaining 0.2 per cent on Thursday.
Gold was also flat at $1,360.30 an ounce ahead of the payrolls report, heading for a 0.7 per cent gain for the week.
Crude oil
Oil pulled back slightly after rallying overnight following a modest stockpile drop at the US delivery hub for crude futures. It is still well above the 3-1/2-month lows hit earlier this week, as traders covered short positions.
US crude was down 0.4 per cent at $41.75 a barrel after surging 2.7 per cent overnight. It's on track for a 0.4 per cent gain for the week.
Global benchmark Brent crude futures slipped 0.5 per cent to $44.07, heading for a weekly rise of 3.8 per cent.
Aussie at 3-week high
The Australian dollar hovered near a 3-week high, after the Reserve Bank of Australia said core inflation is likely to remain below target until 2018, leaving the door open to more policy easing following the cut in its benchmark rate to an all-time low of 1.5 per cent this week.
The futures market is pricing in a 50-50 chance of another cut by year-end.
The Aussie climbed 0.25 per cent to $0.7649, and Australian shares added 0.5 per cent.