Asian shares were mixed and the dollar extended its overnight gains on Friday on signs of strong U.S. economic growth, while the euro inched up after sliding overnight on data suggesting slowing growth in Europe.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 0.15 percent, as investors balanced positions on the last day of the month and quarter. The benchmark is up almost 13 percent for the quarter.
China’s CSI 300 index .CSI300 added 0.25 percent, putting it on track for a 4.1 percent quarterly rise.
Activity in China’s manufacturing sector expanded to 51.8 in March, an official survey showed, beating expectations for 51.6. The services sector rose to 55.1 from 54.2 in February. The 50-point mark separates growth from contraction.
The data comes as U.S. President Donald Trump foreshadowed a tense meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses.
Trump also tweeted that the meeting, which is also expected to cover differences over North Korea and China’s strategic ambitions in the South China Sea, “will be a very difficult one”.
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 China seek a trade surplus with the United States.
“The Trump comments on Xi aren’t material, although they may weigh slightly on Asian sentiment, with trade discussions, being a known risk in the increasingly protectionist Trump era,” said Angus Gluskie, managing director of White Funds Management in Sydney.
Japan’s Nikkei .N225 jumped 0.6 percent after Japanese core consumer prices rose 0.2 percent in February. While that is the fastest annual pace in nearly two years, it is still a far cry from the central bank’s 2 percent target.
The Japanese benchmark is set to end the first quarter up 0.3 percent.
The South African rand dropped to a seven-week low after President Jacob Zuma sacked finance minister Pravin Gordhan in a cabinet reshuffle after days of speculation that has rocked the country’s markets and currency, replacing him with home affairs minister Malusi Gigaba.
A statement from the president’s office just after midnight on Thursday said Zuma had also appointed Sfiso Buthelezi as Deputy Finance Minister replacing Mcebisi Jonas.
The weakened rand saw the dollar up 0.9 percent at 13.4075 rand ZAR=, on track to end the week almost 8 percent higher.
Overnight, all three major Wall Street indexes closed about 0.3 percent higher after fourth-quarter annualized growth in U.S. gross domestic product was revised up from the previously reported figure. Consumer spending growth was also revised up.
The upbeat data also helped lift the dollar.
The dollar index .DXY, which tracks the greenback against a basket of six peers, rose 0.1 percent to 100.51, after hitting a two-week high on Thursday. Despite this week’s gains – it is up almost 1.7 percent since Monday’s four-month low – the greenback is set to end the quarter 1.7 percent lower.
The dollar added 0.2 percent to 112.125 yen JPY= after Thursday’s 0.8 percent jump, but is heading for a 4 percent quarterly decline.
Nervousness could return to U.S. markets over concerns about the ties between Trump’s presidential campaign and Russia. Trump’s former national security adviser, Michael Flynn, has discussed with congressional committees the possibility of giving testimony in their investigations of potential ties between the Trump campaign and Russia, his lawyer said on Thursday.
“Looking forward, this is important,” Gluskie said. “The stability of the Trump administration appears to be critical to markets. 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 EUR=EBS inched up slightly to $1.068 in an effort to make up some of Thursday’s 0.8 percent tumble. The common currency is on track to post a gain of 1 percent for March and 1.5 percent for the quarter.
Data showed German and Spanish consumer inflation slowed more than expected in March on a pull back in oil prices, disappointing investors who were hoping for a wind down of the European Central Bank’s monetary stimulus.
In commodities, oil prices retreated early on Friday.
U.S. crude slipped 0.2 percent to $50.24 a barrel. On Thursday, it closed 1.7 percent 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 6.4 percent loss for the week.
Global benchmark Brent LCOc1 lost 0.25 percent to $52.83 and is on track for a 7 percent decline for the quarter.
Gold XAU= pulled back 0.1 percent to $1,241.41 an ounce, extending Thursday’s 0.7 percent loss on the dollar’s strength, but remains set for a 7.8 percent quarterly gain.
(Reporting by Nichola Saminather; Editing by Shri Navaratnam)
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