By Daniel Inman
HONG KONG — Japanese stocks shot higher on Friday, capping off the Nikkei’s best week so far this year, as the region bounced back from Thursday’s weakness.
The region took its lead from the U.S., where stocks on Wall Street ignored a mixed batch of economic data and edged closer to a record high. The S&P 500’s close on Thursday, just 0.5% below an all-time high, is the latest sign that the risk-averse sentiment that rocked global markets in late January and early February has abated.
Japanese stocks led Asia, with the Nikkei Stock Average JP:NIK +2.88% ending 2.9% higher at 14865.67. Friday’s strong gain and a surge Tuesday after the Bank of Japan said it would increase incentives to spur bank lending helped the index end 3.9% higher on the week, its best weekly performance since November. The Nikkei however, remains Asia’s worst performer so far this year — down 8.8%.
The Nikkei was supported by a weaker local currency, with the dollar comfortably back above 102 yen USDJPY +0.27% overnight and strengthening during Asian trade. The greenback was last at ¥102.50, compared with ¥102.27 late Thursday in New York.
Trading in Japan has proved volatile in recent sessions as volume has dried up. “A thin stock investor base is allowing the extreme reactions to good and bad data we’ve seen this week,” said Daisuke Uno, strategist at Sumitomo Mitsui Banking Corp.
Elsewhere in the region, Australia’s S&P/ASX 200 AU:XJO +0.49% added 0.5% to 5438.70 and South Korea’s Kospi KR:SEU +1.41% rose 1.4% to 1957.83. In China, Hong Kong’s Hang Seng Index HK:HSI +0.78% rose 0.8% to 22568.24 and the Shanghai Composite CN:SHCOMP -1.17% lost 1.2% to 2113.69.
The region was also picking itself up from a selloff in the previous session, when a preliminary measure of Chinese manufacturing activity hit a seven-month low. Hong Kong and Japan were particularly badly hit, with losses of 1.2% and 2.2% respectively.
In corporate news, Australia was in focus as the country’s earnings season progressed. At the forefront was National Australia Bank AU:NAB -1.76% NABZY +0.88% , the country’s fourth-largest bank by market value, which fell 1.8% after reporting its first-quarter profit rose 11% on a decline in bad loans as well as an improvement in its U.K. banking business. The stock fell as investors focused on the bank’s weak income growth.
Shares in Insurance Australia Group AU:IAG +0.54% IAUGY -1.65% rose 0.5% in Sydney as one of the country’s largest general insurers said that its half-year profit rose 39% due in part to cost cutting and more disciplined underwriting.
