Asian shares slid from a 5 1/2-month high on Friday on disappointing earnings from US blue-chip companies, but Japanese shares surged after a media report about a possible Bank of Japan policy change weakened the yen.
Japan’s Nikkei erased earlier losses to end the day up 1.2 per cent, reaching an 11-1/2 week high and extending the week’s gains to 4.3 per cent.
The yen, which held steady against the dollar earlier in the session, slipped after a report by Bloomberg News said the Bank of Japan may consider applying negative rates to its lending programme for financial institutions.
The dollar rose 0.5 per cent, buying 109.98 yen.
Asia-Pacific shares
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.8 per cent, a day after it hit its highest level since early November. With that decline, gains for the week shrink to 0.4 per cent.
European shares look set to follow suit, with financial spreadbetters predicting Britain’s FTSE 100 and France’s CAC 40 will open down 0.5 per cent, and Germany’s DAX will fall 0.4 per cent.
The Shanghai Composite index retreated 0.4 per cent, extending its weekly loss to about 4.5 per cent.
Hong Kong’s Hang Seng index slid 0.9 per cent, narrowing gains for the week to 0.5 per cent.
Wall Street
On Thursday, Wall Street suffered its first loss in four sessions on a mixed bag of quarterly reports and a warning by Verizon Communications that a strike would likely impact its bottom line.
The S&P 500, which came within striking distance of its record closing peak of 2,134.28 touched last May, lost 0.52 per cent to 2,091.48.
After the bell, Google parent-company Alphabet, Microsoft, Visa and Starbucks all posted disappointing quarterly reports, sending their stocks down 4 per cent or more.
Alphabet, the world’s second-largest company by market capitalisation, fell more than 6 per cent, taking around $32 billion off its market value.
“Essentially, global shares and commodities have been rallying since US Federal Reserve Chair Janet Yellen had indicated a dovish stance in March,” said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.
“But you would need more improvement in economic fundamentals for the rally to go further. The S&P 500 is quite overvalued, trading at 17.8 times the forecast profits. Disappointing earnings from hi-tech companies will surely cap the market,” he said.
Crude oil
Oil prices fared better than shares, with strong gains on Friday contributing to one of their biggest weekly gains this year, as producers took advantage of higher prices by locking in production.
Brent crude futures advanced 1.5 per cent to $45.19, bringing gains since Monday to 8.2 per cent.
US crude rose 1.5 per cent to $43.78, up 13 per cent since Monday.
Both have surged about 67 percent since their January trough. But despite the recent rally, oil markets remain oversupplied with supply consistently exceeding demand.
The rise in oil prices is thought to be behind a noticeable rise in global bond yields in the past couple of days.
US Treasuries yield
The 10-year US Treasuries yield last stood at 1.8559 per cent, compared with 1.752 percent at the end of last week. It rose to a three-week high of 1.891 per cent on Thursday.
The 10-year German Bunds yield rose to a five-week high of 0.242 per cent on Thursday.
The euro advanced 0.1 per cent to $1.1300 following a volatile session overnight but remained off its one-week high of $1.1399 set on Thursday.
ECB policy meet
The European Central Bank held policy steady at its meeting on Thursday, prompting a rally in the common currency on the view that the central bank won’t boost stimulus anytime soon.
But a statement by ECB President Mario Draghi that he would use all the tools at his disposal for “as long as needed” sent it skidding back to $1.1270.
Commodity currencies took a breather from their recent rally.
The Australian dollar advanced 0.2 per cent to $0.7754, off its 10-month high of $0.7836 touched the previous day.