Asian shares mostly higher, Japan's Nikkei falls ahead of weekend election

Asian stocks were mostly higher Friday aside from in Japan, where investors were awaiting the outcome of an election on Sunday.

US futures fell and oil prices rose.

Japanese Prime Minister Shigeru Ishiba, who took office just weeks ago, called the snap general election to drum up support as the ruling Liberal Democrats grapple with a political funding scandal. Recent upheavals have added to uncertainty for markets, complicating the Bank of Japan's efforts to shift away from long-standing near-zero interest rates.

Core inflation in Japan's capital was 1.8 per cent in October, lower than the central bank's 2 per cent target for the first time in five months, the government reported. That reinforced expectations that the central bank will keep its key interest rate unchanged at a policy meeting next week.

 

Tokyo's Nikkei 225 index lost 1 per cent to 37,771.79, while the Japanese yen rose against the U.S. dollar. Early Friday, the dollar was trading at 151.64 yen, down from 151.89 yen.

Hong Kong's Hang Seng added 1.1 per cent to 20,720.60, and the Shanghai Composite gained 0.8 per cent to 3,307.14.

China's central bank kept its medium-term lending rate unchanged at 2 per cent. It also issued 700 billion yuan ($98.3 billion) in one-year medium-term lending facility loans to financial institutions, according to the bank's statement.

Elsewhere, South Korea's Kospi climbed 0.3 per cent to 2,590.30 and Australia's S&P/ASX 200 climbed 0.1 per cent to 8,216.50. Taiwan's Taiex increased 0.3 per cent.

On Thursday, the S&P 500 rose 0.2 per cent to 5,809.86, breaking its first three-day losing streak since early September. It bounced between losses and gains through the day, and it was roughly evenly split between stocks rising and falling.

The Dow Jones Industrial Average fell 0.3 per cent to 42,374.36 and the Nasdaq composite rose 0.8 per cent to 18,415.49.

Tesla led the market with a jump of 21.9 per cent after the electric-vehicle maker reported better profit for the latest quarter than analysts expected. An optimistic CEO Elon Musk also predicted 20 per cent-30 per cent sales growth next year, though revenue for the latest quarter fell short of analysts' forecasts. It was the best day for Tesla's stock since 2013.

Boeing sank 1.2 per cent after its machinists voted to continue their strike, which has crippled aircraft production. More than 60 per cent of union members who voted on the proposed contract rejected it, keeping them on the picket lines six weeks into their strike.

Stocks have broadly retreated this week after the S&P 500 and Dow both set records at the end of last week. They've been hurt by rising Treasury yields in the bond market, which can make investors less willing to pay high prices for stocks. Critics had already been saying beforehand that stocks looked too expensive given how much faster their prices have risen than corporate profits.

A report on unemployment claims Thursday offered a mixed picture on the job market. It said fewer workers applied for unemployment benefits last week, which can be a signal of relatively low layoffs. But it also said the total number of those collecting benefits rose to its highest level in almost three years.

Treasury yields, which had eased overnight, pared their losses after the release of the unemployment claims report before yo-yoing. The yield on the 10-year Treasury fell to 4.20 per cent from 4.25 per cent late Wednesday. It's still well above its 4.08 per cent level from late last week.

A separate preliminary report said growth in U.S. business activity may have accelerated slightly last month, as strength for companies in services industries continue to make up for weakness in manufacturing. The report from S&P Global also showed a recovery in confidence as companies anticipate greater stability and certainty after the upcoming presidential election.

A third report, meanwhile, said sales of new homes were stronger last month than economists expected.