EQUITIES

Shares in the Asia-Pacific were mixed on Friday as investors remained uncertain over how aggressive central banks action towards tackling inflation.

Japan stocks surged as it returns to trade following a national holiday, surging 2.42% to its highest level since January. South Korea’s KOSPI rose 0.12%, and the broader Hong Kong Hang Seng index was 0.32% higher.

In Australia, the S&P/ASX 200 shed 0.70%, while in Singapore, the FTSE Straits Times Index slipped 0.41%. Mainland China markets dipped as the Shanghai Composite shed 0.16%.

Thailand’s market is closed for a holiday Friday.

Overnight in the U.S., the three major averages opened the session higher but lost steam as the day progressed before closing mixed. The S&P 500 dropped 0.07% at 4,207.27, the Nasdaq Composite 0.58% to 12,779.91, while the Dow inched 0.08% higher to 33,336.67.

OIL

Oil prices dropped on Friday amid an uncertain demand outlook based on contrasting views from OPEC and the IEA, though benchmark contracts were headed for weekly gains as recession fears eased.

Brent crude futures fell 0.30%, to $99.12 a barrel, while U.S. WTI crude futures was flat at $94.06 a barrel.

Brent is still on track to gain more than 4% this week, recouping part of last week's 14% tumble, its biggest weekly decline since April 2020. While the WTI was heading for a weekly gain of more than 5%, recouping about half of the previous week's loss.

On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for growth in world oil demand in 2022 by 260,000 bpd. It now expects demand to rise by 3.1 million bpd this year.

That contradicts the view from the IEA. The International Energy Agency raised its forecast for demand growth, to 2.1 million bpd, as soaring natural gas prices lead some consumers in power generation to switch to oil. At the same time, the IEA raised its outlook for Russian oil supply by 500,000 bpd for the second half of 2022, as the country's output had proven more resilient than expected despite sanctions over the Ukraine conflict. However, the IEA said OPEC would struggle to boost production.

CURRENCIES

The dollar index was at 105.176 after a recent drop from above 106, set for its third weekly loss in four, though is still up 10% this year, rising alongside the 225 basis points of Fed rate rises since March.

The U.S. 10-year Treasury yields held firm and hovered near a three-week peak after rising overnight and were last trading at 2.877%.

In the world of cryptocurrencies, bitcoin was flat after it shaved some overnight gains and was last at $24,022.

GOLD

Gold prices steadied and were on track for their fourth consecutive weekly gain, as broader weakness in the dollar countered pressure from an uptick in the Treasury yields and prospects of U.S. interest rate hikes.

Spot gold held its ground at $1,790.50 per ounce and has gained nearly 1% so far this week. U.S. gold futures was flat at $1,806.50.

Spot silver eased 0.2% to $20.34 per ounce, platinum fell 0.1% to $955.16, and palladium slipped 0.6% to $2,262.53.

ECONOMIC OUTLOOK

Asian stocks were easier on Friday, as profit-taking activities emerged and as investors remained filled with uncertainty over how aggressively the Federal Reserve would raise interest rates to tackle inflation despite softer numbers earlier this week.

The slight easing of U.S. inflation readings this week had driven global stocks higher, until a string of Fed speakers has left little doubt they will tighten monetary policy until inflation pressures fully abate.

Thursday's data showed U.S. PPI unexpectedly fell in July amid a drop in the cost of energy products. The drop in PPI raised bets in futures markets that the Fed would hike rates by 50-bps in September instead of 75-bps as was expected earlier in the week. This followed Wednesday's surprise news that CPI were unchanged in July due to a drop in gasoline prices.

Gains in Chinese shares were watched as new COVID-19 lockdowns in more Chinese cities, including the eastern export hub of Yiwu, which dented sentiment.