SINGAPORE, July 8 (Reuters): Asian shares inched up on Friday, tracking Wall Street gains overnight, after positive signals from US central bank officials doused fears of an economic recession, which also supported most currencies in the region.
Indonesian shares rose more than 1% and were set for their second straight weekly rise, while the Indonesian rupiah and Malaysian ringgit edged up 0.1%.
All three major US indices rose overnight as two Federal Reserve officials downplayed recession fears and signalled a slower pace of rate hikes after July.
Benchmark US. Treasury yields rose from five-week lows overnight, reducing the scale of inversion in a key part of the yield curve, and also lowering recession concerns. "
Ten-year US Treasury yields closed at 3% as markets pared recession worries...There is a chance for a more benign risk backdrop if peak duration fear is behind us as we expect. If the Fed does not overtighten, a soft landing is likely," DBS rates strategist Eugene Leow said in a note.
With US recession concerns easing slightly, Asian equities were driven by economy-sensitive stocks, which rose with oil prices and interest rates.
The risk-on sentiment also spurred trimming of bearish bets in emerging forex markets.
However, news of the shooting of former Japanese Prime Minister Shinzo Abe prompted some selling in the regional currencies as investors leapt to safe assets, shunning the riskier assets.
"It (shooting of former Japanese PM) did trigger some selling in the emerging forex markets on Friday afternoon, but it was very limited as the main focus remained on the Fed minutes which prompted a relief rally in Asia," said Junvum Kim, sales trader at Saxo Capital Markets.
In South Korea, the won inched down, having weakened 0.25% for the week, while shares rose more than 1% intraday and were set for their biggest weekly jump in five months.
Elsewhere, the Philippines central bank is prepared to raise its policy rates by 50 basis points at its August meeting, and follow up with further policy actions to control inflation and counter currency depreciation, its governor said on Thursday.
Shares in Manila surged more than 2% and were set for their first weekly gain in five, while the peso traded 0.1% lower.
Thailand's central bank said it would let the baht move in line with market forces, but take action if there was excessive volatility in the currency. The baht reversed early gains of 0.2% to trade flat after the central bank's statement. - Bloomberg
