Asia Markets

Asian shares follow US markets higher as investors digest earnings

Key Points
  • Asian shares gained
  • Euro extended losses following the European Central Bank's Thursday policy move
  • The Australian dollar was lower on the day after the coalition government lost its parliamentary majority
  • Blue-chip Chinese companies posted strong results
  • Earnings from tech giants released after U.S. market close topped expectations

Most major Asian indexes closed higher in Friday trade as the euro extended losses after Thursday news from the European Central Bank. That followed U.S. stocks closing mostly higher and then several big name tech companies reporting expectation-topping results.

Markets on the move

Friday morning saw the Nikkei 225 tack on 1.24 percent, or 268.67 points, to close at a fresh 21-year high of 22,008.45. Banking and tech shares led gains on the index: SMFG jumped 2.19 percent, Mitsubishi UFJ soared 2.75 percent and Canon rose 1.77 percent. Sharp closed up 3.6 percent ahead of its third-quarter earnings release.

Core consumer prices in September increased 0.7 percent compared to a year ago, government data showed. Consumer prices rose 0.2 percent if the effect of fresh food and energy was removed.

Across the Korean Strait, the Kospi rose 0.64 percent to finish the session at 2,496.63 with manufacturing stocks notching strong gains in the session: Samsung Heavy closed up 5.41 percent, Hyundai Steel rose 4.94 percent and Samsung Engineering gained 4.6 percent.

Down Under, the S&P/ASX 200 declined 0.22 percent to end at 5,903.2, although the energy sub-index leading gains on the broader index. Oil Search closed up 0.82 percent, Beach Energy jumped 4.23 percent and Origin Energy gained 1.95 percent.

The rose 0.6 percent by 3:00 p.m. HK/SIN as investors digested quarterly earnings reports from top Chinese companies. China Construction Bank shares traded in Hong Kong rose 3.55 percent despite the 4.1 percent increase in third-quarter profit missing a forecast 6.1 percent rise in a Reuters poll. China Life Insurance was up more than 2 percent after the company posted strong results on Thursday.

Mainland markets were mixed, even though the blue-chip CSI-300 index rose 0.71 percent to its highest levels since 2015. The closed up 0.26 percent at 3,416.4192 and the Shenzhen Composite shed 0.337 percent to finish the session at 2,023.4996.

Stocks on Wall Street closed mostly higher on Thursday as investors digested better-than-expected results from multiple major companies. The Dow Jones industrial average rose 0.31 percent, or 71.40 points, to close at 23,400.86, but the Nasdaq closed down 0.11 percent.

The lead up

The European Central Bank on Thursday said it would reduce monthly asset purchases to 30 billion euros ($35 billion) from 60 billion euros beginning in January 2018. Those purchases would extend until at least September next year, the central bank said.

The euro extended losses on Friday after tumbling in reaction to the news in the last session — even though analysts said the announcement had largely been in line with expectations. The common currency traded at $1.1620 at 2:45 p.m. HK/SIN compared to levels around the $1.17 handle earlier this week.

Market watchers said that was because investors had thought the central bank would adopt a more hawkish slant.

"This puts the ECB in the camp of a 'dovish taper' and contributed to a classic case of buy the rumor and sell the fact for the euro," OCBC Treasury Research said in a morning note.

Meanwhile, Australian Deputy Prime Minister Barnaby Joyce was disqualified from parliament, resulting in the loss of the coalition government's parliamentary majority.

The Australian dollar clawed back some gains after falling as low as $0.7623 on the news. Still, the Aussie currency was lower on the day, last trading at $0.7638 compared to Thursday's close of $0.7660.

Stateside, the race for the Federal Reserve chair succession progressed as House Republicans asked Donald Trump to consider "new leadership" for the central bank. Trump is reportedly considering Fed Governor Jerome Powell and Stanford University economist John Taylor for the position, a Politico report said.

Tax reform was also in the spotlight after the House narrowly passed a version of the 2018 federal budget and paved the way for passage of the GOP tax-reform package.

Corporate news

Stateside, tech companies Amazon, Alphabet, Microsoft and Intel reported results after the market close on Thursday. Earnings from all four topped expectations.

Down Under, Australian dairy processor Murray Goulburn has consented to a buyout from Saputo, a Canadian milk company, valued up to 637.8 million Australian dollars ($488 million), Reuters said. Bega Cheese, an Australian company earlier reported to be an interested party, said late on Thursday it was bowing out of the race, the Sydney Morning Herald reported.

Macquarie Group shares outperformed Australian financials in morning trade after the bank announced a record-first half profit. Net profit for the period rose 19 percent to 1.25 billion Australian dollars ($96 million), topping expectations. Macquarie stock closed up 3.92 percent, outperforming other banking stocks.

In Japan, shares of Subaru closed down 2.6 percent following news the automaker had not complied with inspection rules. Subaru had allowed uncertified personnel to inspect vehicles at a factory complex, Reuters reported.

Watching the dollar

On the back of the weaker euro, the dollar index, which tracks the U.S. currency against a basket of rivals, rose to 94.841 by 2:46 p.m. HK/SIN compared to levels around the 93 handle seen earlier this week.

Against the yen, the dollar edged up to trade at 114.28.

The commodities trade

Brent crude was steady after closing at its highest level in 27 months. Brent futures rose 0.05 percent to trade at $59.33 a barrel. The rise in prices followed Thursday comments from Saudi Arabian Crown Prince Mohammed bin Salman about the Kingdom's commitment to stabilizing oil markets.

U.S. crude futures lost 0.08 percent to trade at $52.60.

— CNBC's Christina Wilkie contributed to this report.