Asia stocks mostly higher amid improving investor sentiment following US gains
The mainland Chinese markets, watched in relation to the ongoing trade war between Beijing and Washington, were higher on the day. The Shanghai composite was up about 0.74 percent to close around 2,553.83 while the Shenzhen composite gained 0.758 percent to about 1,313.36. The Shenzhen component also rose 0.611 percent to close around 7,474.01.
Meanwhile, Hong Kong's Hang Seng index gained about 0.5 percent, as of its final hour of trade.
The moves followed after officials from Washington and Beijing met for trade talks earlier this week — details about the progress were sparse. U.S. and China have halted an ongoing trade war to try and resolve sticking issues on a number of areas. Analysts who spoke to CNBC on Friday were divided whether a deal between the two economic powerhouses would be forthcoming.
"I think (U.S. President Donald) Trump wants to have a win and (Chinese leader) Xi Jinping desperately needs to have a win. So, I think they're gonna come to some agreement ... probably in the first quarter, " Andrew Collier, managing director at Orient Capital Research, told CNBC's "Street Signs " on Friday.
Collier said, however, trade frictions between Washington and Beijing are unlikely to end as "China clearly ... is a threat to the United States and plus it has done many things that many countries disagree with."
Others did not agree.
"There are some that would argue that the Trump administration needs a deal, given that they're walking into an election cycle in 2020 ... I would respectfully disagree," James Sullivan, head of equity research ex-Japan at J.P. Morgan, said. "What the Trump administration needs to do is incite his base. A deal, by definition, means compromise. Compromise doesn't incite."
Shares of Fast Retailing, the company behind the Uniqlo chain of apparel stores, surged 6.19 percent despite reporting a more than 8 percent decline in its year-on-year operating profit for the three months ended Nov. 30.
"The results were terrible ... probably the worst in the sector and it's the most expensive stock in the sector ... and it's going up," Michael Allen, senior vice president of research of Japanese retailers at Jefferies, told CNBC on Friday about Fast Retailing.
He said the company "made horrible mistakes," beyond just poor weather, which it attributed to explain the lackluster sales figures.
"They knew the weather was gonna be a problem going into this quarter and they picked up massive amounts of inventory and now they're having to discount it and the second quarter's going to be worse domestically," he warned.
Meanwhile, former Nissan Chairman Carlos Ghosn was indicted on two new charges of financial misconduct on Friday. The former auto industry giant had denied earlier charges that had been laid against him during a court appearance this week. Shares of Nissan gained 0.86 percent on the day.
The upward moves in Japan followed even as government data revealed Japanese household spending for November declined more than expected. It fell 0.6 percent compared to a year earlier — economists in a Reuters poll were expecting a drop of 0.1 percent.
South Korea's Kospi also rose 0.6 percent to close at 2,075.57.
Australia's ASX 200, however, closed 0.36 percent lower at 5,774.60.
Data released by the Australian Bureau of Statistics Friday morning showed that seasonally adjusted retail sales in the country was up 0.4 percent in November from a month earlier, beating a Reuters poll that predicted a 0.3 percent gain.
Shares of retailers in the country were mixed on the back of that data release; Wesfarmers was marginally lower and Woolworths slipped 0.77 percent. JB Hi-Fi, on the other hand, added 2.57 percent.
"Retail Sales data around this time of year are particularly interesting as consumer spending patterns have been shifting," Ray Attrill, head of foreign exchange strategy at National Australia Bank, said in a morning note.
He cited the rise of sales days such as Black Friday and Cyber Monday as resulting in households pushing their Christmas and Boxing Day expenditure forward into November.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||20359.70||195.90||0.97|
|HSI||Hang Seng Index||HSI||26667.27||145.84||0.55|
|ASX 200||S&P/ASX 200||ASX 200||5774.60||-20.70||-0.36|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7581.72||42.45||0.56|
The U.S. moves came despite Federal Reserve Chairman Jerome Powell voicing concern over increasing U.S. debt.
"I'm very worried about it," Powell said at The Economic Club of Washington, D.C. "From the Fed's standpoint, we're really looking at a business cycle length: that's our frame of reference. The long-run fiscal, nonsustainability of the U.S. federal government isn't really something that plays into the medium term that is relevant for our policy decisions."
However, "it's a long-run issue that we definitely need to face, and ultimately, will have no choice but to face," he added.
The Fed chief's comments came as the annual U.S. deficit reaches new sustained highs above $1 trillion, a fact many economists worry could spell trouble for future generations. Annual deficits have topped $1 trillion before, but never during a time of sustained economic growth such as now, raising concern about what would happen if a recession hits.
The Japanese yen, widely viewed as a safe-haven currency, traded at 108.38 to the dollar after seeing highs below 108 yesterday. The Australian dollar was at $0.7212 after seeing lows above $0.714 in the previous session.
— Reuters and CNBC's Thomas Franck contributed to this report.
Europe shares close mixed with Brexit and the Fed in focus; Taylor Wimpey up 4.8%
European Markets: FTSE, GDAXI, FCHI, IBEX
Autos were the worst performing sector, as former Nissan Motor Chairman Carlos Ghosn was indicted on two new charges of financial misconduct. Shares of Renault, which Ghosn still heads, fell 2.2 percent as Reuters reported that Nissan was expanding its probe to include dealings that took place in the U.S., India, and Latin America.
Elsewhere in the sector, Volkswagen said on Friday that its deliveries rose 0.9 percent to a record 10.83 million last year, putting it neck-and-neck with Renault-Nissan-Mitsubishi in the race to be the world’s biggest vehicle manufacturer.
Looking at individual stocks, U.K. housebuilder Taylor Wimpey was among the highest gainers, rising by 4.8 percent after a broker upgrade. The Swiss company Straumann was also among the top performers, gaining 3.2 percent after Reuters reported that its CEO wants to increase sales five-fold within a decade.
Stocks in the U.S. were trading lower on Friday as concerns grow over the partial government shutdown, which is now in its 21st day. The Dow Jones Industrial Average, S&P 500, and the Nasdaq all saw slight losses during the trading session.
Meanwhile, the dollar softened on Friday following dovish remarks from the U.S. Federal Reserve. The Fed’s Chairman Jerome Powell said on Thursday that he is “very worried” about the ballooning U.S. debt. “It’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face,” he said.
Back in Europe, there is also a strong focus on politics as the U.K.’s departure from the European Union approaches. Japanese Prime Minister Shinzo Abe said Thursday in London that he hopes both sides will avoid a no-deal. U.K. Foreign Secretary Jeremy Hunt said Friday morning that there could be Brexit paralysis if lawmakers do not approve departure plans next week.
In terms of data, GDP figures showed the U.K. economy slowed down in the three months to November — hitting its weakest pace in six months.
Stocks rise more than 2% for the week
The Dow Jones Industrial Average and S&P 500 both rose more than 2 percent this week while the Nasdaq Composite jumped 3.45 percent. Amazon and Facebook both rose more than 4 percent this week, while Netflix surged 13.45 percent as investors put money into the beaten-down names from December. The Dow and S&P 500 also posted their first three-week winning streak since August.
This week was also the calmest on Wall Street in a while. It was the fifth day without an S&P 500 move greater than 1 percent in either direction, the longest quiet streak since early October for the benchmark.
But Nancy Davis, CIO of Quadratic Capital, thinks volatility will remain high in the foreseeable future. "We've seen the rise in volatility coming back into the markets," said Davis. "This is just the beginning of what we should expect to see. These big ups and downs are going to become more common."
On Friday, the Dow slipped 5.97 points to 23,995.95 while the S&P 500 closed just below breakeven at 2,596.26. The Nasdaq Composite dipped 0.2 percent to 6,971.48. This was the first decline for the major indexes in six sessions.
The federal government remained partially closed on Friday for a 21st straight day, stoking fears the shutdown could drag on for a long time. On Thursday, President Donald Trump tweeted he would skip the annual World Economic Forum at Davos later this month due to the shutdown.
Trump also said he will "probably " declare a national emergency if the White House and Congress cannot reach a deal to end the shutdown.
"We think a deal will be reached to reopen the government, but only after economic, financial and/or political pain is felt," Joseph Song, an economist at Bank of America Merrill Lynch, said in a note to clients. "Every two weeks of a shutdown trims 0.1 [percentage points] from growth; additional drag is likely due to delays in spending and investment."
Concerns over a possible slowdown in China weighed on equities Friday.
Goldman Sachs analyst Karen Holthouse said Starbucks would be the next company to warn of a slowdown in China following Apple's recent revenue guidance cut. "The recent AAPL [Apple] announcement (while potentially also product-driven) cited trade concerns/macro, and MCD [McDonald's] acknowledged softer trends in the region at a late November event," said Holthouse, who downgraded the coffee maker to neutral from buy.
Starbucks shares fell 0.7 percent.
Apple slashed its revenue guidance for fiscal first quarter last week, citing an unexpected slowdown in China. On Thursday, Federal Reserve Chairman Jerome Powell said that warnings shows the Chinese economy is slowing. "It's showing up a lot in consumer spending," Powell said. "Weak retail spending; everyone has seen the Apple news."
Concerns around Chinese economic growth come as China tries to strike a permanent deal with the U.S. to settle a punitive trade war. The world's largest economies have slapped tariffs on billions of dollars worth of goods since last year.