Asian stocks climbed Friday as positive sentiment carried over from a third day of gains for US equities. Investors for now are looking through the flare-up in the US-China trade war, which has left the yuan at its weakest in five months.
Japanese equity indexes rose more than 1%, with gains more modest in Hong Kong, South Korea and Australia. Mainland China shares opened flat. The S&P 500 climbed Thursday as solid earnings and strong housing data buoyed shares. The 10-year Treasury yield was back at 2.39% after testing 2019 lows earlier this week. Weakness is enduring for China’s offshore yuan amid the trade stand-off, heading for a second straight week of declines.
Data supporting the robustness of US companies and the economy, along with hints from the Trump administration that it may be willing to compromise on trade, helped stocks bounce back from the battering they took when the tariff battle with China flared last week. But the headlines have kept traders on tenterhooks, most recently with US President Donald Trump signing an order that’s expected to restrict Chinese telecommunications firms from selling in the US.
With the yuan among the worlds’ worst performers this month and heading back toward the much-discussed level of 7 per dollar, analysts are assessing the impact of the trade conflict for potential policy responses in China. In most recent developments, the Trump administration threatened to blacklist China’s Huawei Technologies Co. and Walmart Inc. warned tariffs would lead to higher consumer prices.
Elsewhere, the pound remained under pressure as UK Prime Minister Theresa May faced a new threat to oust her.