Asian stocks continued their recovery on Friday as a technology-led rally in the U.S., triggered by strong U.S. retail data, lifted sentiment on the region’s trading floors.

Japan’s Nikkei index was set for its best week in more than four years as optimistic risk sentiment spilled over from Wall Street.

Last week’s market turmoil was largely forgotten after a flood of U.S. economic data dispelled recession fears in the world’s largest economy and pushed back expectations of aggressive interest rate cuts in the U.S.

Leading the pack was Tokyo’s Nikkei, which rose more than 3% and is up nearly 8% this week, its best performance since early April 2020, buoyed by easing concerns about the state of the U.S. economy, a pause in the rapid appreciation of the yen and a revival in Japanese economic growth.

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The Nikkei stock average rose 3.64%, or 1,336.03 points, to close at 38,062.67, while the broader Topix gained 2.99%, or 77.85 points, to 2,678.60.

Wall Street’s major indices closed higher on Thursday after U.S. retail sales rose 1 percent in July, after being revised down 0.2 percent in June.

The Philadelphia SE Semiconductor Index closed nearly 5% higher, giving new momentum to major Japanese chip stocks. Tokyo Electron rose 3.8% and Advantest gained 5.4%.

Meanwhile, the yen weakened against the dollar overnight, boosting Japanese export stocks such as automaker Toyota Motor, which rose about 2 percent.

The Nikkei fell more than 12 percent on August 5, its biggest one-day loss since Black Monday. It has since recovered those losses but is still well below its all-time high of 42,426.77 reached in mid-July.

Technology stocks pushed Hong Kong shares higher after earnings releases from e-commerce giants helped lift sentiment, while Chinese stocks were more or less unchanged.

Chinese e-commerce giant JD.COM beat second-quarter earnings forecasts, while Alibaba Group Holding missed market expectations for first-quarter revenue.

The Hang Seng Tech Index Shares of JD and Alibaba rose by 8.9 and 4.1 percent respectively. The main index Hang Seng rose by 1.88 percent or 321.02 points and closed at 17,430.16.

Share prices of antimony producers rise

The Chinese blue-chip index CSI300 rose 0.11 percent, while the Shanghai Composite Index rose 0.07 percent or 2.07 points to 2,879.43. The Shenzhen Composite Index on China’s second-largest stock exchange fell 0.30 percent or 4.62 points to 1,548.93.

Share prices of Chinese antimony producers rose as much as 10% after Beijing decided to limit exports of the strategic mineral of which it is the largest supplier.

China’s financial sector sub-index rose 0.38 percent, while the consumer goods sector and real estate sector indices fell 0.31 percent and 0.45 percent, respectively.

Chinese H shares – i.e. shares of companies from mainland China – listed in Hong Kong rose 1.91 percent to 6,150.41.

Elsewhere in the region, stocks in Singapore, Seoul, Sydney, Taipei, Manila, Mumbai, Bangkok and Jakarta all posted strong gains in earlier trade.

MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.3 percent and is expected to gain more than 2 percent for the week.

S&P 500 futures rose 0.13%, while Nasdaq futures gained 0.2%. Eurostoxx 50 futures gained 0.17%, while FTSE futures fell 0.06%.

Increase in retail sales in the USA

Strong US retail data and low weekly unemployment figures were the latest boost to positive risk sentiment after this week’s mild inflation report reinforced speculation of an imminent, but likely moderate, rate cut by the Fed.

The markets are currently calculating only a 25% chance that the Federal Reserve will cut interest rates by 50 basis points next month. A week ago, the chance was still at 55%, according to the CME FedWatch tool.

The Swiss franc, which also rose sharply last week due to the flight to safe haven assets, was last at 0.8712 against the dollar and is expected to decline by more than 0.6 percent over the course of the week.

Elsewhere, the euro struggled to break the $1.10 mark against a stronger dollar, supported by higher U.S. Treasury yields.

The yield on the two-year note hovered near its highest level in over a week, last at 4.0749%, while the yield on the benchmark 10-year note stabilized at 3.9035%.

In terms of commodities, oil prices fell slightly on Friday but were expected to rise on a weekly basis as positive US data eased investor concerns about a possible recession in the world’s largest oil consumer.

Brent crude futures fell 0.35% to $80.76 a barrel, while U.S. West Texas Intermediate crude futures fell 0.5% to $77.78 a barrel, but both were still on track for weekly gains of more than 1%.

Key figures

Tokyo – Nikkei 225 > Increase of 3.64% to 38,062.67 (closing price)

Hong Kong – Hang Seng Index > Increase of 1.88% to 17,430.16 (closing price)

Shanghai – Composite > Increase of 0.07% to 2,879.43 (closing price)

London – FTSE 100

New York – Dow > Up 1.39% to 40,563.06 (Thursday close)

• Reuters with additional editing by Sean O’Meara

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Hang Seng falls despite economic bets, data improves Nikkei

Sean O’Meara

Sean O’Meara is an editor at Asia Financial. He has been a newspaperman for over 30 years and has worked for local, regional and national newspapers in the UK as a writer, editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.