Backed by US Economic Rebound, Asian Stocks Surge

As investors awaited the release of employment data, Asian stocks mostly rose on Friday, fueled by optimism about Wall Street's rally and economic recovery in the United States.

The Nikkei 225, Japan's benchmark stock index, recovered early losses to rise by less than 0.1 percent to 29,357.04. The S&P/ASX 200 index in Australia rose 0.2 percent to 7,075.70, while the Kospi in South Korea rose 0.7 percent to 3,202.31. The Hang Seng in Hong Kong fluctuated during the day, closing at 28,648.74, up less than 0.1 percent, while the Shanghai Composite fell 0.5 percent to 3,425.43.

China's trade with the United States and the rest of the world increased by double digits in April, indicating that consumer demand had recovered, but that growth was slowing. Global exports increased 32.3 percent year over year to $263.9 billion on Friday, matching March but still short of the explosive 60.6 percent increase seen in the first two months of 2021.

In contrast to a year ago, when global economies were shut down to combat the Coronavirus, China's trade gains seem particularly dramatic. The encouraging signs come despite renewed trade tensions between the United States and China.

Export-dependent Japan is preparing to extend its state of emergency to curb the spread of Covid-19 infections, which kicked in last month in some urban areas, with people asked to stay home and restaurants to close early. 

“Today's session was tentative ahead of US non-farm payrolls. The most important question will be if the US job market and wage growth are recovering faster than anticipated, supporting the reflation trade theme with increasing inflation expectations that are pulling commodity prices higher,” said Anderson Alves, a trader with ActivTrades. 

One of the keys to a  sustained economic rebound has been job growth, but it has lagged in other aspects of the economy, such as retail sales and consumer trust. A choppy day of trading on Wall Street ended Thursday with stocks broadly higher and another all-time high for the Dow Jones Industrial Average. Banks and technology companies led a late-afternoon turnaround that pushed the S&P 500 to a 0.8 per cent gain, reversing the benchmark index's losses for the week. Gains in most Dow companies, including Goldman Sachs, IBM, and Cisco Systems, nudged the blue-chip index to a new high for the second straight day. 

Apple, Microsoft, and Intel were among the winners, helping to boost the tech stock market. This helped the  S&P 500's technology sector snap a seven-day losing streak, reversing the Nasdaq's early decline.

The stock indexes wavered earlier in the day, weighed down by a sell-off in health care stocks. Drugmakers Moderna and Pfizer closed lower following news late Wednesday that the White House supports waiving intellectual property rights for Covid-19 vaccines in order to speed up immunizations in poorer countries.

The S&P 500 closed at 4,201.62. The index is on track for its eighth weekly gain in the past 10 weeks. The Dow rose 0.9 per cent to 34,548.19. The Nasdaq Composite climbed 0.4 per cent, to 13,632.84. The tech-heavy index had been down 1.1 per cent in the early going.

The Russell 2000 index of smaller companies also recovered from a stumble to an essentially flat finish, adding 0.1 per cent to 2,241.42. Some healthcare stocks fell after news late Wednesday that the White House supports waiving intellectual property rights for Coronavirus vaccines to help immunize poorer countries faster. That slide was countered by gains in household goods makers, banks, and communication companies.

Moderna lost 1.4 per cent after the company reported its first-ever quarterly profit, helped by the company's Coronavirus vaccine. The drop was largely tied to the news from the White House, as shares of other drug companies fell, including Pfizer, which dropped 1 per cent. Shares of Johnson & Johnson were not hurt by the news, partly because J&J has other businesses like Band-Aids, the pain reliever Tylenol, and its baby products franchise. The stock picked up 0.4 per cent. 

Stocks have mostly pushed higher on expectations of an economic recovery and strong profits this year. Massive support from the US government and the Federal Reserve, and increasingly positive economic data, have also encouraged investors to push stock prices to all-time highs. Economists expect the April jobs data to show employers hired 975,000 workers last month as the economy accelerated out of the pandemic and vaccines rolled out nationwide. The unemployment rate is expected to drop to 5.8 per cent from 6 per cent.

In energy trading, benchmark US crude added 34 cents to $65.05 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 38 cents to $68.47 a barrel. In currency trading, the U.S. dollar inched down to $109.12 Japanese yen from $109.19 yen. The euro cost $1.2057, down from $1.2062.