Movements in the bond markets were in the spotlight as sovereign bond yields rose overnight. Bond yields move inversely to prices.
The selloff in the bond markets came amid expectations of more hawkish central bank policy.
The benchmark 10-year U.S. Treasury yield rose to nearly two-month highs at 2.39 percent, compared with the 2.33 percent seen earlier in the week. Meanwhile, yields of the German 10-year bund crossed the 0.5 percent level for the first time since January 2016, in the previous session.
National Australia Bank economist Tapas Strickland said the selloff in bonds came after a weak French 30-year bond auction. That was reinforced by minutes from the European Central Bank indicating that officials had discussed removing its easing bias.
“The clear implication here is that buyers have less appetite for European debt as they expect yields to head higher and for the ECB to gradually remove policy accommodation in the near future,” Strickland said in a Friday morning note.
In Japan, the Bank of Japan stepped up buying of five- to 10-year Japanese government bonds (JGB) under its quantitative easing program, Reuters reported. The BOJ has set a target of keeping the 10-year JGB yield at zero.
This week, the 30-year and 40-year JGBs have touched their highest yields since February of 2016, while the 10-year touched a five-month high of 0.105 percent, Reuters reported.
The BOJ’s bond-buying sent the yen lower, with the greenback fetching 113.78 yen at 10:22 a.m. HK/SIN, yen, compared with around 113.10 before the bond moves.
In economic news, U.S. private payrolls data from ADP on Thursday indicated that 158,000 jobs were created in June, compared with the 185,000 expected. The ISM non-manufacturing index, however, indicated that non-manufacturing activity grew, coming in at 57.4 in June, compared with the 56.5 forecast.
Data out of the U.S. on Thursday encapsulated the current economic conundrum, said Michael McCarthy, chief strategist at CMC Markets.
“Around the globe, an ongoing increase in activity is only weakly lifting employment, and both wages and prices are showing little signs of life. A low inflation environment endangers the withdrawal timetable and increases market risks,” McCarthy warned in a Friday note.
Ahead, nonfarm payrolls data due Friday in the U.S. were likely to also be closely watched by markets.
Shares of commodities trader Singapore-listed Noble Group were down 3.13 percent after jumping 36 percent in the previous session. It remained unclear what drove the sudden rush into the stock. Shares of the company are down 63.53 percent year-to-date.
In currencies, the euro strengthened on the back of the release of the ECB’s minutes. The common currency traded at $ 1.1416 to the dollar at 9:53 a.m. HK/SIN, compared with levels around the $ 1.13 handle seen in the last three sessions.
Meanwhile, the dollar index, which measures the dollar against a basket of rival currencies, firmed to trade at 95.842 — but remained lower than the 96 handle seen for most of the week.
On the economic calendar for Friday, China foreign exchange reserves data was expected.
Stateside, stocks closed lower, with the Dow Jones industrial average falling 0.74 percent, or 158.13 points, to close at 21,320.04.