Offshore Yuan Drops on PBOC Move; Japan Shares Fall: Market Wrap

• Offshore Yuan Drops on PBOC Move; Japan Shares Fall

China’s offshore yuan slumped after the central bank strengthened its currency fixing by the most in more than a decade. A rally in Asian stocks fizzled as a decline in Japanese shares overshadowed gains in Hong Kong ahead of the monthly U.S. jobs report.

The MSCI Asia Pacific Index, which is on course for the best start to a year since 2010, retreated for the first time in three days as Japanese shares declined. The offshore yuan declined after the daily fixing as a liquidity crunch at banks pushed the People’s Bank of China to support the exchange rate. Samsung Electronics Co. shares climbed 2 percent in Seoul after profit beat estimates as buoyant memory chip prices helped the world’s largest smartphone maker bounce back from the death of its fire-prone Galaxy Note 7.

China is risking eroding confidence in its currency by repeatedly tightening capital controls, according to hedge-fund manager Benjamin Fuchs. While the stock rally and Treasury rout that greeted Donald Trump’s win have been under threat for the past month, the dollar stabilized Friday after a two-day tumble. The U.S. jobs report is expected to confirm a sixth straight year with more than 2 million jobs added, a pace that could be difficult to sustain.

Stocks

• The MSCI Asia Pacific Index slipped 0.2 percent as of 11:45 a.m. in Tokyo. Hong Kong’s Hang Seng rose 0.4 percent and Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi advanced 0.4 percent as Samsung climbed. Singapore’s Straits Times Index rose 0.3 percent.
• Futures on the S&P 500 Index were little changed after the underlying gauge fell 0.1 percent Thursday, just 0.1 percent below its record set on Dec. 13. Financial shares sank 1 percent as the drop in rates posed a threat to lending profits.
• The Shanghai Composite rose less than 0.1 percent and Taiwan’s Taiex index was little changed.
• The MSCI Emerging Markets Index extended gains for a fourth day, rising 0.2 percent.

Currencies

• The offshore yuan lost 0.5 percent after a four-day climb.
• The Bloomberg Dollar Spot Index rose 0.1 percent after falling 1 percent Thursday in its biggest slide since July on a closing basis. Companies added fewer jobs than forecast in December, according to a private research group.
• The yen fell 0.4 percent to 115.77 per dollar after strengthening 1.6 percent on Thursday. South Korea’s won lost 0.3 percent.
• Mexico’s peso climbed as much as 1.5 percent the previous session after Banxico confirmed that it was selling dollars to bolster the exchange-rate from a record low. The peso erased the advance after Trump threatened Toyota Motor Corp. with a border tax for planning to build a factory in Mexico.

Commodities

• Crude was little changed after climbing 0.9 percent Thursday following a report that Saudi Arabia is cutting production as it implements an agreement to ease a global supply glut sparked the turnaround.
• Gold retreated 0.1 percent to $1,178.48 per ounce, after a three-day, 2.9 percent climb.

Bonds

• Australian bonds climbed, sending 10-year yields down five basis points to 2.69 percent, a level last seen in November; similar New Zealand rates dropped five basis points to 3.19 percent.
• U.S. Treasuries rallied Thursday by the most since the post-Brexit jolt, with the yield on the 10-year benchmark falling nine basis points to 2.34 percent. That was the biggest drop since June 27.