Asia stocks down, dollar posts gains on positive US data

Reuters: Asian shares fell on Friday as investors balanced positions on the last day of the quarter.

The dollar rose on positive US economic growth data and the euro was flat after overnight losses on figures suggesting slowing expansion in Europe.

European shares were headed for a muted start, with financial spreadbetters expecting Britain’s FTSE 100 to open 0.3% lower, France’s CAC to start the day down 0.1% and Germany’s DAX to be little changed.

MSCI’s broadest index of Asia-Pacific shares outside Japan retreated 0.55%. The benchmark is up 12.5% for the quarter.

Hong Kong shares fell 0.6%, but were still headed for a 9.8% quarterly jump.

“Asia saw some pretty healthy profit-taking after a few sessions of solid gains, and as investors await Eurozone and US inflation data tonight,” said James Woods, global investment analyst at Rivkin Securities in Sydney.

China’s CSI 300 index bucked to trend to add 0.4%, putting it on track for a 4.2% quarterly rise.

Activity in China’s manufacturing sector expanded at the fastest pace in nearly 5 years in March, beating expectations, an official survey showed on Friday. The data came as US President Donald Trump foreshadowed a tense meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the US could no longer tolerate massive trade deficits and job losses.

Trump will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said.

Chinese Vice Foreign Minister Zheng Zeguang said on Friday that China does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States.

US stock futures were down between 0.2 and 0.3% in Asian trade.

Japan’s Nikkei reversed gains to close down 0.8% as markets digested data that showed Japanese core consumer prices rose 0.2% in February. While that is the fastest annual pace in nearly two years, household spending and consumer inflation remained subdued when the effect of rising energy costs was stripped out.

The Japanese benchmark was down 1.1% for the first quarter.

The South African rand dropped to a two-month low after President Jacob Zuma sacked and replaced both the finance and deputy finance ministers in a cabinet reshuffle after days of speculation that has rocked the country’s markets and currency.

The weakened rand saw the dollar up 1.7% at 13.5098 rand, on track to end the week almost 9% higher.

Overnight, all three major Wall Street indexes closed about 0.3% higher after fourth-quarter annualised growth in US gross domestic product was revised up from the previously reported figure.

The upbeat data also helped lift the dollar.

The dollar index, which tracks the greenback against a basket of six peers, rose 0.1% to 100.54, after hitting a two-week high on Thursday. Despite this week’s gains – it is up almost 1.7% since Monday’s four-month low – the greenback is set to end the quarter 1.6% lower.

The dollar was steady at 111.885 yen after Thursday’s 0.9% jump, but is heading for a 4.2% quarterly decline.

Markets are looking to US personal consumption data for February later on Friday, a measure of potential inflation watched by the Federal Reserve.

Nervousness could return to US markets on news Trump’s former national security adviser, Michael Flynn, has offered to testify before congressional committees probing possible ties between the Trump campaign and Russia, his lawyer said on Thursday.

“Looking forward, this is important,” said Angus Gluskie, managing director at White Funds Management in Sydney. “As markets have shown over recent weeks, if Trump’s position is undermined by security issues or a reticent right wing Congress, investors are likely to respond negatively.”

The euro was flat at $1.0676 after Thursday’s 0.8% tumble. The common currency is on track to post a gain of 0.9% for March and 1.45% for the quarter.

Data showed German and Spanish consumer inflation slowed more than expected in March, disappointing investors who were hoping for a wind-down of the European Central Bank’s monetary stimulus.

In commodities, US crude slipped 0.5% to $50.09 a barrel. On Thursday, it closed 1.7% higher after zipping to a three-week-high earlier in the session after Kuwait backed an extension of OPEC production cuts.

It is heading for a 6.7% loss for the quarter.

Global benchmark Brent slid 0.7% to $52.64 a barrel and is on track for a 7.4% decline for the quarter.

Gold pulled back 0.1% to $1,241.81 an ounce, extending Thursday’s 0.7% loss on the dollar’s strength, but remains set for a 7.85% quarterly gain.