Asian shares rebounded from a six-week low as oil rallied and the dollar retreated against higher-yielding currencies.
Banking and technology stocks drove gains in the MSCI Asia Pacific Index, which was recovering from its steepest back-to-back losses in more than a month. The Shanghai Composite Index was set to lost ground for the fifth week in a row, its longest losing streak since 2012. U.S. and U.K. equity index futures advanced as U.S. crude rose to a seven-month high and copper rebounded from levels last seen in February. New Zealand’s dollar and South Korea’s won led gains against the greenback, which strengthened this week against all but one of its 16 major counterparts.
Some $900 billion was wiped of the value of global shares over the last three days as prospects for a June interest-rate increase in the U.S. surged, spurred by comments from Federal Reserve officials, minutes of the last policy meeting and quickening inflation. Fed Funds futures put the odds of a move next month at 28 percent, up from 4 percent a week ago. Finance chiefs from the Group of Seven nations are meeting in Japan to discuss ways to tackle the worsening outlook for the global economy.
“Despite these intimations by the Fed, the market continues to remain skeptical over the likelihood of a rate hike in June or July,” Angus Nicholson, a market analyst in Melbourne at IG Ltd., said in an e-mail to clients. “Market pricing for a June or July rate hike was trimmed slightly and the dollar index pulled back.”
Tsai Ing-wen, Taiwan’s first female president, was sworn in Friday and will deliver her inaugural address as the island’s leader. U.S. data are forecast to show sales of previously owned homes increase in April for a second month, while current-account figures for the euro area are also scheduled. Malaysia has inflation figures coming and Thailand’s markets are closed for a holiday.
The MSCI Asia Pacific Index added 0.4 percent as of 12:03 p.m. Tokyo time, rebounding from a six-week low. Hong Kong’s Hang Seng Index gained 1.2 percent, while benchmarks in China and Japan gained as much as 0.3 percent. The Shanghai Composite Index was still down 0.4 percent for the week, while the Topix has risen. Taiwan’s Taiex rose 0.5 percent.
Futures on the S&P 500 climbed 0.3 percent after the benchmark’s 0.4 percent drop on Thursday saw it erase gains for 2016. Contracts on the U.K.’s FTSE 100 Index rallied 0.9 percent.
Crude oil rose 1.3 percent to $48.79 a barrel in New York, headed for a weekly advance of more than 5 percent. U.S.output slid for a 10th week to the lowest since September 2014 as gasoline use increased before a period of seasonal demand, the Energy Information Administration said Wednesday.
“We’ve got U.S. demand picking up and combining with bullish supply news filtering through the market,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “Unless there is a clear new fundamental reason to buy oil, I think $50 is a hard psychological level to break through.”
Copper rose 0.3 percent in London, trimming its weekly decline.
The kiwi climbed 0.4 percent versus the dollar and the won advanced 0.2 percent. The yen was little changed, set for a weekly drop of 1.2 percent.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, held near its strongest level since March. The British pound was the only major currency to strengthen against the U.S. currency this week, buoyed by polls indicating that the campaign to keep the U.K. inside the European Union is extending its lead before a referendum next month.
New York Fed chief William Dudley touted on Thursday the prospect of policy tightening at one of the central bank’s next two meetings, while Richmond Fed President Jeffrey Lacker said the case for hiking would likely be “very strong.” Minutes of the Fed’s last policy meeting were released on Wednesday and showed officials discussed raising interest rates as early as June.