The Chinese stock market fell after the party, and others strengthened ahead of the US employment data Reuters

Sano Hideyuki

TOKYO (Reuters)-On the second day of the Chinese Communist Party’s centennial celebration, Chinese stocks fell on Friday, while other regional markets climbed to record highs before Wall Street’s US employment data released later in the global trading day Stay strong.

Due to the decline in the Chinese and Hong Kong stock markets, the MSCI Asia Pacific’s broadest index outside of Japan fell 0.7%, and most other markets maintained weak gains.

The 1.2% decline was due to market speculation that the People’s Bank of China may begin to tighten monetary policy, and overseas investors may be upset by President Xi Jinping’s warnings about foreign powers in his speech celebrating the centenary of his party.

Masahiko Loo, Portfolio Manager of AllianceBernstein (NYSE:) in Tokyo, said: “It is difficult to expect a loose monetary situation as before.”

“Following the tough remarks of Chinese President Xi Jinping, foreign investors may also become cautious,” he added.

Xi Jinping said that any foreign forces that attempt to bully China will be “beaten to the fore.”

On Wall Street, Thursday set a sixth consecutive historical closing high, as the new quarter started with optimistic economic data.

The number of initial jobless claims continues to decline, reaching the lowest level since the pandemic closed. A report by Challenger, Gray & Christmas shows that the number of planned layoffs by US companies has dropped by 88% from last year, a 21-year low.

Another index of the US manufacturing industry showed that last month factory activity fell to 60.6 from 61.2 in May, but it remained above 50, which marked the expansion of the manufacturing industry.

The monthly non-agricultural employment data to be released later on Friday is expected to show an increase of 700,000 in June, and economists expect wages to increase by about 0.4% in June.

Although the prospect of a strong economic recovery has supported the stock market, investors still worry that a rapid recovery from the pandemic may push inflation to levels that make the Fed feel uncomfortable.

Invesco Global Market Strategist Tomo Kinoshita said: “The situation is still uncertain and no one is confident about their forecasts. The market will be very sensitive to any rise in inflation.”

In the bond market, the 10-year U.S. Treasury bond yield was 1.466%, which has basically remained below 1.5% in the past few weeks, partly because inflation expectations have faded.

In the currency market, the U.S. dollar/yen exchange rate hit a 15-month high on Friday and a few-month high against other major currencies as traders bet that strong US labor data may further boost the U.S. dollar.

The dollar rose to a high of 111.66 yen against the yen, hitting the highest level since March last year.

The euro fell to a three-month low of $1.1837 against the U.S. dollar overnight, and was last reported at $1.1845.

The Australian dollar fell to $0.7461 against the U.S. dollar and fell to its lowest level since December on Thursday.

Oil prices are firm, as there are signs that OPEC+ oil-producing countries may increase production at a slower-than-expected rate in the next few months, and rising global fuel demand will tighten supply.

OPEC+ sources said on Thursday that OPEC+ postponed the ministerial meeting until Friday to hold more talks on oil production policy, after the United Arab Emirates blocked an immediate plan to ease production cuts and extend them until the end of 2022. .

The futures trading price was US$75.01 per barrel, which was as high as US$76.22 on Thursday, the highest level since October 2018.