Asia stocks end week with rally, dollar takes breather

Asian markets headed into the weekend on a positive note Friday, with Tokyo again propelled by the weaker yen but the dollar edged back slightly in the afternoon following its recent surge against global currencies.

With traders confident the Federal Reserve will hike interest rates before Christmas, the dollar is cruising along, hitting record highs against India's rupee and the Turkish lira and touching multi-month highs elsewhere.

The advance has come hand in hand with a rally across world markets since Donald Trump's shock election win, with dealers expecting his big spending, high tax plans will give a boost to the world's top economy.

However, there are some concerns inside emerging market governments about his campaign pledge to review global trade deals, which could lead to an era of protectionism and throw up huge US tariffs.

"There’s this anticipation of the US raising rates that is a positive signal that the US economy is strong and that’ll keep pushing additional inflows into the dollar," Niv Dagan, executive director at Peak Asset Management LLC, told Bloomberg News.

"The fact that there are outflows out of emerging markets, like the Philippines, places a lot of pressure on their equity markets and we’ll continue to see that stronger dollar as a negative."

In Asian morning trade the dollar flirted with the 114 yen mark for the first time since March, providing more support for Japan's exporters, before it eased back slightly. 

- 'Wall of buyers' -

The Nikkei came off earlier highs but ended 0.3 percent up, its seventh straight win.

Another weak reading on Japanese consumer prices meant any monetary tightening by the central bank was unlikely in the foreseeable future.

The greenback dipped slightly against many other currencies, although it still remains elevated.

Stephen Innes, a senior trader at OANDA in Singapore, said: "Price action suggests markets still under positioned dollar, as any sell-offs are shallow and running into a wall of buyers."

Among regional currencies, South Korea's won, the Indonesian rupiah, Malaysia's ringgit and the Thai baht were all stronger but still sitting near multi-month lows as traders drag their cash out to seek better returns in the US.

Nicholas Teo, a strategist at KGI Fraser Securities in Singapore, said: "The dollar has been really strong in anticipation of Yellen’s move next month and that strength in the US dollar is ultimately going to mean that emerging market assets would be seen as disadvantaged."

In other stock markets, Hong Kong closed up 0.5 percent, Shanghai gained 0.6 percent, Sydney added 0.4 percent and Seoul put on 0.2 percent while Singapore jumped 0.8 percent. There were also gains in Wellington, Taipei, Manila and Bangkok.

In early European trade London rose 0.2 percent while Paris and Frankfurt were flat.

- Key figures around 0800 GMT -

Tokyo - Nikkei 225: UP 0.3 percent at 18,381.22 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 22,723.45 (close)

Shanghai - Composite: UP 0.6 percent at 3,261.94 (close)

London - FTSE 100: UP 0.2 percent at 6,840.75

Euro/dollar: UP at $1.0590 from $1.0574 Thursday

Dollar/yen: DOWN at 113.10 yen from 113.20 yen 

Pound/dollar: DOWN at $1.2457 from $1.2464

Oil - West Texas Intermediate: DOWN 60 cents at $47.36 a barrel

Oil - Brent North Sea: DOWN 65 cents at $48.35

New York - Dow:  UP 0.3 percent at 19,083.18 (Wednesday's close)

Source: AFP