On Friday, Japanese stocks soared as officials announced that Prime Minister Yoshihide Suga would resign, while the dollar fell to a month low against major peers as traders anticipated U.S. jobs data amid record-high global equities markets.
After word surfaced that Suga, the embattled leader of the ruling Liberal Democratic Party, will stand down in September and not seek for reelection, Japan's TOPIX stock index climbed to a 30-year high, closing up 1.50 percent.
The Nikkei increased by 1.87%.
“Suga's decision not to run for the LDP's leadership reduces the likelihood of a major defeat in the next general election... Market players in Japan have been relieved as a result,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.
Away from Japan, MSCI's broadest index of Asia-Pacific equities outside Japan rose 0.12%, with gains of 0.40 percent in Australia and 0.66 percent in Korea.
If the gains persist, the regional benchmark would have posted its ninth session of gains in the last ten, as it returns to its mid-July level before Chinese regulatory crackdowns drove shares plummeting.
Asian stocks, on the other hand, are still below their early-year highs and lagging behind those in other parts of the world. On Friday, MSCI's all-country world index, which had closed the previous session at its fifth consecutive closing high, climbed even higher.
Stock futures in the United States increased 0.18 percent, but Euro Stoxx 50 futures were down 0.06 percent, and FTSE futures were down 0.06 percent.
Chinese blue chips were down 0.20 percent, while Hong Kong was down 0.54 percent, bucking the trend as traders sought to combine poor Chinese economic statistics with the possibility of future intervention.
According to a private survey released on Friday, activity in China's services industry shrank sharply in August, hampered by limitations enacted to combat the COVID-19 Delta variant.
With several surveys this week indicating that China's GDP is slowing, investors expect Beijing to boost fiscal spending and credit growth, but that such measures will be tightly tailored as the Federal Reserve of the United States begins to unwind its own stimulus.
Focus on FED
Traders are also thinking about the Fed's plans on Friday, as they want to have a better idea of the timing and speed of US tapering with the release of non-farm payroll data later in the day.
The remaining key prerequisite for action, according to Fed Chair Jerome Powell, is an improvement in the employment data.
According to a Reuters poll of experts, non-farm payrolls likely grew by 750,000 jobs last month, following a 943,000 increase in July.
“When it comes to tapering, the labor market is now the focus. The expectation is for a September tapering announcement if we're around 750,000,” said Stefan Hofer, chief investment strategist at LGT private bank in Hong Kong.
Hofer said he was concentrating on leisure and hospitality employment because they were a good indicator of the pandemic's recovery status.
The yield on benchmark 10-year Treasury notes was last 1.2937 percent, compared to its U.S. closing of 1.294 percent on Thursday, as investors were cautious ahead of the data release.
The dollar remained stuck around month lows against a basket of currencies, with the euro doing most of the heavy lifting.
As markets begin to react to the possibility of more sustained eurozone inflation and reduced assistance from the European Central Bank, the euro hit its highest level versus the greenback since early August Friday in Asian hours.
Oil prices fell as traders hedged their bets ahead of the non-farm payrolls report in the United States, but were still on track for small weekly gains.
Crude oil in the United States fell 0.21 percent to $69.84 per barrel. Brent crude dropped 0.3% to $73.01 per barrel. [O/R]
