{{Asian shares and the dollar stayed pressured while Japanese equities outperformed on Friday, and investors remained nervous over whether the U.S. Federal Reserve might soon taper off the stimulus program that has helped send Wall Street soaring.}}
European stock markets are expected to edge higher, with financial spreadbetters predicting London’s FTSE 100 .FTSE, Paris’s CAC-40 .FCHI and Frankfurt’s DAX .GDAXI to open up 0.2 percent higher. A 0.1 percent rise in U.S. stock futures pointed to a steady Wall Street open. .L.EU.N
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gave up early gains to trade down 0.3 percent, nearly matching Thursday’s six-week low. With a fall of about 4 percent so far in May, the index was set for its worst monthly performance in a year.
“Generally speaking, we are going to be in a situation where markets will be looking towards the Fed’s quantitative easing to be wound down finally. We’ll see over the next few months nervousness in risk markets, and equity markets in general,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Immediate focus for Asia now will be Chinese economic data due over the coming week and U.S. nonfarm payrolls due next Friday, he said.
“Between now and then volatility is expected to spike as the herd tries to read in to every little data point the effect on future monetary policy,” Jonathan Sudaria, a trader at Capital Spreads, said in a note to clients, referring to how markets have zeroed in on the short term vacillations of whether the Fed will taper or not.
Global markets rose overnight on a set of weaker-than-forecast data which pointed to a fragile economy still in need of monetary policy support.
China shares were ending their best month this year on a down note, with Hong Kong markets also weak as investors took profit on outperformers ahead of economic data over the weekend.
“People are getting nervous about the Fed, but it’s important to realize any pullback in quantitative easing is going to have to be gradual,” said Larry Jiang, chief strategist at Guotai Junan International Securities.
Australian shares .AXJO inched up 0.2 percent after touching their lowest in nearly two months the previous session while South Korean shares rose edged up 0.1 percent.
Japan’s Nikkei stock average .N225 outshined its Asian peers with a 1.7 percent gain, after tumbling more than 5 percent to a five-week low on Thursday as exporters took a hit from the dollar’s fall against the yen. The Nikkei scaled a 5-1/2-year peak just last week. .T
Analysts said the recent correction presents an opportunity for investors to re-enter the market at better levels.
“It’s not a bear market, it’s just a correction,” said Kenichi Hirano, a strategist at Tachibana Securities.
The dollar was up 0.1 percent against the yen at 100.82, off a three-week low of 100.46 yen reached on Thursday. The dollar index .DXY, measured against a basket of six key currencies, steadied after touching a three-week low on Thursday, having hit its highest since July 2010 of 84.498 just a week ago.
reuters
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