Friday 07.05 BST
What you need to know
- Renminbi trading band weaker after currency hits five-week low
- European bourses expected to rise
- Asia stocks lift ahead of “Golden Week”
- Oil arrests three-day decline
- Dollar re-establishes rally move to stand up 0.8% on the week
After a day where markets digested the Trump administration’s tax reform framework, Asian stocks were up ahead of a major national holiday in China next week. Oil was something of an outlier, arresting three days of declines, as was the Chinese currency, which continued to weaken despite expectations that it would stabilise ahead of a five-yearly leadership meeting next month. European equity markets are expected to rise.
The renminbi declined 0.3 per cent to Rmb6.6760 against the dollar on Friday after China’s central bank again set the renminbi’s trading band weaker — the currency is at a six-week low against the dollar.
The People’s Bank of China set the daily fix — the midpoint around which the renminbi can trade 2 per cent in either direction against the dollar — at Rmb6.6369, 0.1 per cent softer than the previous day and marking the fifth straight day of lower guidance from the central bank.
Since September 8 — when the PBoC relaxed controls on capital outflows that had been used to boost the currency — the renminbi has weakened more than 3 per cent.
But it is pegged to stabilise ahead of the Chinese Communist party’s 19th National Congress, which starts on October 19.
Authorities have signalled they do not want the renminbi to weaken too much from current levels, however, particularly ahead of the party congress, according to ANZ analysts.
“While a weaker currency could bode well for the country’s inflation outlook and debt mechanism, Chinese policymakers appear to be concerned about its negative impact on capital outflows and market confidence,” ANZ analysts David Qu and Betty Wang said.
But Chinese policymakers will still “need to follow the broader movement of the USD in the global market,” they added.
Major Asia-Pacific stock markets were mostly up on Friday ahead of a major national holiday in China next week. According to opening calls from London Capital, Germany’s Xetra Dax will rise 11 points and London’s FTSE 100 will gain 4 points.
Tokyo’s Topix index was down 0.2 per cent but a report of a merger between two Japanese sushi chains saw shares in Genki Sushi and Sushiro Global jump more than 7 per cent.
Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 index were up 0.3 per cent.
South Korea’s Kospi led the region, up 0.8 per cent. The Shenzhen composite was up 0.6 per cent and Shanghai added 0.3 per cent.
After an uneven session in the US, the S&P 500 managed to gain 0.1 per cent to close at a fresh record on Thursday while the tech-heavy Nasdaq Composite ended flat.
Brent oil was paring back losses on Friday, up 0.3 per cent and still above the $57 a barrel threshold at $57.55, after three days of declines followed a 3 per cent spike higher on Monday tracking potential supply disruption in the Middle East.
West Texas Intermediate, the US benchmark, was down 0.1 per cent at $51.52 a barrel. Meanwhile, gold was down 0.1 per cent at $1,285.43 an ounce in early trading on Friday after trading as low as $1,277 on Thursday, near its lowest point in a month.
Gold has tracked unease over North Korea’s nuclear programme moves in and out of investors’ focus. It is down 0.2 per cent at $1,284.84, taking down 1 per cent on the week.
Fixed income and forex
Fixed income yields, which move inversely to price, were mixed with the US 10-year government bond up 0.4 basis points at 2.314 per cent.
The dollar index, which measures the greenback against a basket of peers, was up 0.1 per cent, while the yen weakened 0.2 per cent.
For market updates and comment follow us on Twitter @FTMarkets