TOKYO Asian stocks edged up and the dollar rose to 1-1/2-month highs versus the yen on Friday, ahead of the closely-watched U.S. non-farm payrolls report due later in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 percent, taking cues from a modest bounce in Wall Street overnight.
Japan’s Nikkei climbed more than 1 percent on the back of a weaker yen. Shares in South Korea rose 0.3 percent after the country’s Constitutional Court upheld parliament’s Dec. 9 vote to impeach President Park Geun-hye over an influence-peddling scandal.
Wall Street was marginally higher the day before, underpinned by speculation the widely-anticipated labour market report on Friday would show U.S. payrolls growth in February was far more than economist forecast.
The employment figures are drawing particular interest as chances of the Federal Reserve raising interest rates several times this year could improve if the data underlines U.S. economic strength.
“A robust report could give rise to speculation that the Fed could hike rates not just three but even four times this year, in turn pushing up the dollar and U.S. yields,” said Shuji Shirota, head of macro-economics strategy group at HSBC in Tokyo.
“Higher yields could be positive for broader equities, which have drawn support from reflation trades. But some in the market may focus on the potentially negative impact higher yields have on equities, so it is hard to predict the effect of the jobs report.”
Also of concern to broader risk asset markets was crude oil, where prices fell to more than three-month lows overnight as record U.S. crude inventories fed doubts about the effectiveness of OPEC’s recent deal to curb a global glut.
With global energy stocks under pressure, MSCI’s 46-country All World index declined for a sixth consecutive day on Thursday, after setting an all-time high just over a week ago.
U.S. crude rose 0.85 percent to $49.70 a barrel after sliding to $48.59 overnight, the lowest since the end of November. Brent was up 0.7 percent at $52.56 a barrel, although it was still headed for a weekly loss of nearly 6 percent.
Carl Weinberg, chief economist at High Frequency Economics, said that OPEC’s recent cartel-like deal to limit output was working so far, but that the incentive within this hastily assembled deal to cheat was going up as prices were declining.
“So if the U.S. inventory glut extends, or even just persists, the odds will rise that the cartel will fall apart. That eventuality – we are inclined to think of it as a likelihood – will set oil prices tumbling again,” he wrote.
In currencies, the dollar rose to 115.260 yen, its highest since Jan. 27, as benchmark U.S. Treasury yields rose to three-month highs on expectations that Friday’s jobs report could seal expectations for the Fed to hike rates next week.
Cementing views of tighter U.S. policy was also a report on Thursday that showed the number of Americans applying for unemployment benefits rose to 243,000 last week, rebounding from a near 44-year low, but continuing to point to a tightening labour market.
The dollar did not fare as well against the euro after the common currency enjoyed a lift the previous day on European Central Bank head Mario Draghi’s suggestion it was less necessary to prop up the market through ultra-loose monetary policy.
The euro was slightly higher at $1.0590 after rising 0.4 percent overnight.
The dollar index against a basket of major currencies was up 0.1 percent at 101.940 after losing 0.2 percent overnight.
The firmer greenback and the prospect of higher U.S. rates pressured both precious and industrial metals.
Spot gold went as low as $1,197.02 an ounce, its weakest since Jan. 31. [GOL/]
Three-month copper on the London Metals Exchange was at $5,702 a tonne after slipping to a two-month trough of $5,652 the previous day.
(Editing by Jacqueline Wong)