ASIA MARKETS: Nikkei Edges Higher As Yen Pulls Back, But Chinese Shares Ease

By Lucy CraymerFeaturesDow Jones Newswires

Australian equities firm

Early gains faded in some Asia-Pacific markets Friday as investors caught their breath after strong gains this week and ahead of U.S. earnings season.

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"Asia has done well in the past couple of days," said Tai Hui, chief market strategist in Asia at J.P. Morgan Funds.

After further gains overnight in the U.S. and Europe as Federal Reserve Chairwoman Janet Yellen concluded her semiannual congressional testimony, most Asia-Pacific stock indexes started Friday in positive territory. But some of those gains faded by midday.

Second-quarter earnings season begins in earnest later Friday with reports from major U.S. banks J.P. Morgan (JPM) Citigroup (C) and Wells Fargo (WFC) .

"The market clearly is anticipating that there is going to be a beat on consensus" for corporate results in general, said Ric Spooner, chief market analyst at CMC Markets in Australia.

Australia's S&P/ASX 200 rose 0.5%, adding to Thursday's 1.1% move higher. The advance was partly driven by gains in financials, which rose in the U.S. overnight.

"We are also seeing people wanting to come back into the market after it was beaten up a bit," added Spooner. Australia's market has been trailing others in the region for several months, though it closed higher three times this week coming into Friday.

The Nikkei , also three for four this week, rose a further 0.2% as the yen pulled back after its midweek rebound. The dollar moved back up to Yen113.45.

Commodity currencies had a strong run in overnight trading, with both the Australian and New Zealand dollars adding to recent gains.

Tim Kelleher, head of foreign-exchange institutional sales at ASB Bank in New Zealand, said it looked as if the two currencies were playing catch-up with the Canadian dollar, which rallied Wednesday after the central bank's first interest-rate increase in seven years.

Both currencies were little changed versus the U.S. dollar in Asian trading Friday, but New Zealand's NZX 50 Index rose 0.4%.

Korea's Kospi , coming off two consecutive record closes, added 0.2%, and Hong Kong's Hang Seng edged up 0.1% to remain at its best level since mid-2015 and on track for its biggest weekly gain in a year.

Chinese stocks were down, with the Shanghai Composite off 0.2% and the Shenzhen Composite down 0.3%, as investors exercised a bit of caution ahead of possible financial-system changes from the National Financial Work Conference, which started Friday.

In commodities, oil futures fell 0.2% in Asia after a 1% gain overnight.

"There have been some clear signs demand has risen globally...suggesting the glut is evaporating slowly," said Stuart Ive, client adviser at OM Financial.

(END) Dow Jones Newswires

July 14, 2017 07:13 ET (11:13 GMT)