HONG KONG – Asian shares were set for their best week since February on Friday as Chinese markets cheered a burst of central bank liquidity although broader enthusiasm was capped ahead of what could be a pivotal speech by the U.S. central bank chief.
U.S. stock futures were up 0.2% in Asian hours, suggesting some optimism after sentiment on Thursday was dented by a deadly attack in Afghanistan, and after the Federal Reserve’s more hawkish policymakers urged an end to stimulus.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.17%, up 3.78% on the week, which would be its best week since February, while Japan’s Nikkei shed 0.46%.
Chinese blue chips rose 0.45%, a reversal of recent weeks in which mainland stocks have weighed on the region, as investors took comfort in the central bank’s biggest weekly cash injection into the banking system since February. Hong Kong’s benchmark rose 0.15%.
Recent regulatory crackdowns have roiled sectors from property to tech and wiped half a trillion dollars from China’s markets in last week alone.
“A-shares (onshore Chinese shares) and Hong Kong are taking a break after some pretty extreme movements in the last two weeks,” said Qi Wang, CEO of MegaTrust Investment (HK).
“Investors are grappling with the regulatory risk versus still strong earnings.”
ZhongAn Online P & C Insurance Co Ltd rose 6.3% after posting strong results, for example.
Australian and Korean benchmarks traded either side of flat.
In early European trade, the pan-region Euro Stoxx 50 futures were down 0.06%, but FTSE futures rose 0.08%. But the main focus of the day is still to come.
Fed Chair Jerome Powell is set to speak at 1400 GMT in the Kansas City Fed’s central banking conference, an event normally held in Jackson Hole, Wyoming, which has been used by the bank in the past to provide guidance on future policy.
Analysts at RBC said in a note that while much of the summer had been spent waiting for the event, there was “skepticism that the Fed will provide more specific information around a timetable…amidst a rise in Delta variant COVID cases.”
Ahead of the speech, public remarks by the Fed’s more hawkish speakers on Thursday urging the central bank to begin paring bond purchases weighed on Wall Street, which closed slightly lower, ending a streak of all-time closing highs.
The Dow Jones Industrial Average fell 0.54%, the S&P 500 lost 0.58%, and the Nasdaq Composite dropped 0.64%.
Dallas Fed President Robert Kaplan said he believed the economic recovery warrants tapering of asset purchases to commence around October. Earlier, St. Louis Fed President James Bullard said the central bank was “coalescing” around a plan to begin tapering.
The dollar and U.S. yields were little moved on Friday ahead of Powell’s speech.
The yield on benchmark 10-year Treasury notes was 1.3441%, down from a two-week high of 1.375% set the day before, but barely changed from the U.S. close.
Gold rose 0.53% to $1,801.55 per ounce as some investors sought safety ahead of the speech.
U.S. crude rose 1.39% to $68.36 a barrel, Brent crude rose 1.46% to $72.03 per barrel, as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane this weekend.