Asia markets advance amid easing Brexit concerns; weaker yen boosts Nikkei
Asia's major markets closed higher on the final day of a volatile week amid easing concerns that the U.K. would vote to exit the European Union in its June 23 referendum.
Investor sentiment in Asia also received a boost after U.S. stocks ended a five-day losing streak to close higher Thursday.
Japanese shares received a boost from a relatively weaker yen, as the benchmark closed up 165.52 points, or 1.07 percent, at 15,599.66; for the week, the index lost 6.03 percent.
The yen had previously strengthened against the dollar, after the Bank of Japan (BOJ) kept monetary policy steady on Thursday in line with expectations.
Australia's ASX 200 added 16.71 points, or 0.32 percent, to 5,162.70, boosted by a 0.72 percent advance in the financials sub-index, which accounts for nearly half of the broader index. For the week, the Aussie benchmark index lost 2.82 percent.
In South Korea, the Kospi finished nearly flat at 1,953.40; Hong Kong's added 0.42 percent as of 2:51 p.m. HK/SIN.
Chinese mainland shares closed higher, with the benchmark composite up 12.22 points, or 0.43 percent, at 2,885.04, and the Shenzhen composite added 15.29 points, or 0.81 percent, to 1,900.73.
Much of the global economic uncertainty weighing on markets this week was due to the crucial June 23 referendum in the U.K., where Britons will vote to decide to either leave or remain within the European Union. Several surveys released recently have shown public opinion was closely divided, with the Brexit campaign gaining momentum.
Campaigning for the referendum, however, was halted Thursday, after a pro-EU British lawmaker, Jo Cox, was shot to death while meeting with constituents. Police said they arrested a 52-year-old man in the attack on Cox, but did not know of a motive for the killing.
"It is a tragic event. I have to say it may change the psychology of the campaign. And those who are pro-EU might benefit from this tragic event," Fariborz Moshirian, director of the Institute of Global Finance at the UNSW Business School, told CNBC's "Rundown" on Friday.
"The global economy is highly interdependent and for that reason the world is moving towards more unity and diversity rather than isolation from an integrated bloc such as the European Union," he said. "For that reason, I think it is possible to see a very close race and I wouldn't be surprised if the outcome were to be different from what the current opinion polls are showing."
The British pound traded at $1.4246 as of 2:57 p.m. HK/SIN on Friday, climbing after the news from levels as low as $1.40 on Thursday.
| TICKER | COMPANY | NAME | PRICE | CHANGE | %CHANGE |
|---|---|---|---|---|---|
| .N225 | Nikkei 225 Index | NIKKEI | 38,920.26 | UNCH | UNCH |
| .HSI | Hang Seng Index | HSI | 19,376.53 | UNCH | UNCH |
| .AXJO | S&P/ASX 200 | ASX 200 | 7,881.30 | UNCH | UNCH |
| .SSEC | Shanghai | SHANGHAI | 3,122.40 | UNCH | UNCH |
| .KS11 | KOSPI Index | KOSPI | 2,753.00 | UNCH | UNCH |
| .FTFCNBCA | CNBC 100 ASIA IDX | CNBC 100 | 9,787.54 | -8.46 | -0.09% |
Safe-haven currencies, such as the yen, were also pushed higher this week amid Brexit concerns. The dollar/yen currency pair traded as low as 103.58 after the BOJ decision on Thursday. As of 2:52 p.m. HK/SIN on Friday, the pair was at 104.28. The yen also weakened against other major crosses, with the euro/yen at 117.19, up from lows around 115.46 on Thursday.
Japan's Finance minister Taro Aso told reporters on Friday he was deeply concerned about the "one-sided, rapid and speculative moves" seen in the currency market and that he would respond if necessary to ensure stability in currencies, according to Reuters.
Some analysts said Thursday's moves in dollar/yen and euro/yen were largely due to non-Japanese factors.
"We see expectations of Fed rate hikes as the main driver of the dollar/yen," said Michael Sneyd, a foreign exchange strategist at BNP Paribas. He added the fall in the euro/yen pair "in part reflects increased uncertainty related to the U.K.'s upcoming referendum on EU membership."
Major Japanese exporters rallied on Friday, with shares of Toyota closing up 2.65 percent, Nissan adding 1.2 percent and Sony up by 0.68 percent. A relatively weaker yen is a positive for exporters as it increases their overseas profits when converted to local currency.
The advances in equities on Friday saw some shift away from safer-haven assets such as bonds. The yield on the 10-year Japanese government bond was at negative 0.143 on Friday, up from Thursday's low of negative 0.202.
On Thursday, bond yields in Germany, Japan and the U.K. hit record lows, while the U.S. 10-year Treasury yield touched four-month lows of around 1.541 percent.
Oil prices advanced during Asian hours, after slumping nearly 4 percent overnight amid lingering uncertainties. The global benchmark Brent was up 1.23 percent at $47.77 a barrel, after falling 3.6 percent on Thursday. U.S. crude added 0.84 percent to $46.60, after finishing down 3.8 percent during U.S. hours.
Energy plays in Asia closed mixed. Shares of Santos were up 0.94 percent, Oil Search was down 0.45 percent and Inpex gained 1.88 percent. Chinese mainland oil stocks were mostly up, with Sinopec advancing 0.35 percent.
The dollar touched levels near 95.300 overnight against a basket of currencies, but by Friday early morning, the dollar index pared back gains to trade at 94.533 as of 3:00 p.m. HK/SIN.
Daniel Hui from JPMorgan Securities said a temporary dollar discount is likely in the coming months ahead of the U.S. presidential elections.
"We do not believe foreign-exchange markets have yet begun to actively and systematically price in political risk surrounding the upcoming U.S. general elections," Hui said in a note, adding it was likely due to "preoccupation with other imminent global political risk factor (the U.K. EU referendum next week), and because until at least last week, there was still some lingering uncertainty as to who the two candidates competing in November would be."
Hui said in the coming weeks, foreign exchange markets will look to "more actively price in U.S. election risks" and that the dollar discount will likely be seen against reserve assets such as the euro, yen and gold.
Stateside, the closed up 92.93 points, or 0.53 percent, at 17,733.10; the S&P 500 index was up 6.49 points, or 0.31 percent, at 2,077.99 and the composite added 9.98 points, or 0.21 percent, to 4,844.91.