BANGKOK – Asian shares traded erratically Friday but European markets found their footing, a day after global stocks were routed by unexpectedly weak Chinese manufacturing and fears the Federal Reserve will start withdrawing its monetary stimulus.
Japan’s Nikkei 225 index, which plummeted more than 7 per cent Thursday, posted a big morning gain and then took investors on a dizzying ride into negative territory before closing 0.9 per cent higher at 14,612.45. The benchmark swung more than 1,000 points between the day’s high and low.
But calm prevailed in early European trading. Britain’s FTSE 100 was nearly unchanged at 6,695.82. Germany’s DAX rose 0.3 per cent to 8,378.07. France’s CAC-40 gained 0.5 per cent to 3,988.59.
Wall Street looked set for a muted open ahead of the release of durable goods data for April. Dow Jones industrial futures were slightly higher at 15,292 and S&P 500 futures slipped to 1,648.40.
Elsewhere in Asia, South Korea’s Kospi added 0.2 per cent to 1,973.45. Hong Kong’s Hang Seng bobbed between slight gains and losses before falling 0.2 per cent to 22,618.67.
Australia’s S&P/ASX 200 tumbled 1.6 per cent to 4,983.50, hit by losses in banking and mining shares. Benchmarks in the Philippines, Taiwan and New Zealand also fell. Mainland Chinese shares rose, with the Shanghai Composite Index gaining 0.6 per cent to 2,288.53, while the smaller Shenzhen Composite Index rose 1.5 per cent to 1,029.3. Biotechnology and media stocks led the gains.
The Nikkei’s dramatic fall Thursday was attributed on the spike in the interest rate on the country’s benchmark 10-year bond to above 1 per cent for the first time in a year, which came after Fed meeting minutes showed some of its policy makers want the U.S. central bank to start scaling back its monetary stimulus.
The swing in Japanese bonds unnerved investors at a time when Japan’s already overburdened government finances are vulnerable to rises in interest rates. The interest rate, or yield, later slipped back to about 0.9 per cent.
The sell-off is a reminder of Japan’s vulnerability as Prime Minister Shinzo Abe tries to end two decades of stagnation with unprecedented monetary easing, increased government spending and reforms to make the world’s No. 3 economy more competitive.
Abe reassured Japan’s parliament Friday that the government was closely monitoring financial markets and would “proceed with measures to secure sustainable fiscal structure, and secure market confidence.”
Mixed messages from the Federal Reserve about when it might start scaling back its bond-buying program also stirred investor anxiety.
The Fed is buying $85 billion worth of bonds every month as part of its stimulus program. That has kept interest rates low and encouraged investors to put money into stocks and other risky assets. If the Fed slows down its bond purchases, investors fear it could lead to an outpouring of money from stocks.
Among individual stocks, Australia’s Westpac Banking tumbled 2.2 per cent and market heavyweight Commonwealth Bank of Australia declined 1.6 per cent.
The release Thursday by HSBC of a survey showing a decline in Chinese manufacturing for May hurt Australian miners, which have boomed on the back of raw material demand from the world’s No. 2 economy. Mining giant BHP Billiton fell 1.6 per cent. OZ Minerals lost 0.7 per cent.
“The China data looking like it’s hitting a soft patch is hitting resources,” said Stan Shamu, market strategist at IG in Melbourne.
Benchmark oil for July delivery was down 2 cents to $94.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 3 cents to close at $94.25 per barrel on the Nymex on Thursday.
In currencies, the euro rose to $1.2978 from $1.2932 late Thursday in New York. The dollar weakened to 101.68 yen from 101.91 yen.