Reuters - Share prices on China's main indexes fell Friday - a day after China's Communist Party celebrated its centenary - while other regional markets were steady after Wall Street hit highs ahead of U.S. jobs data due later in the world trading day.
Japan's Nikkei gained 0.3% and most other markets held gains but MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7% owing to the decline in China and Hong Kong indexes.
Shanghai Composite fell 1.2% on speculation China's central bank might begin tightening monetary policy, and some possible unease among overseas market participants over President Xi Jinping's warning to foreign powers.
"It is hard to expect loose monetary conditions like before," said Masahiko Loo, portfolio manager at AllianceBernstein in Tokyo.
"Foreign investors are probably turning cautious after hawkish rhetoric from Xi as well," he added. Xi said any foreign forces attempting to bully China would "get their heads bashed."
On Wall Street, the S&P 500 reached its sixth consecutive closing high Thursday on upbeat economic data.
Jobless claims continued their downward trajectory, touching their lowest since the pandemic shutdown and a report from Challenger, Gray & Christmas showed planned layoffs by U.S. companies were down 88% from last year at a 21-year low.
A separate index on U.S. manufacturing showed factory activity slipping to 60.6 in June from 61.2 in May but still above 50, which signifies expansion.
Monthly nonfarm payroll data, due out later Friday, is expected to show a 700,000 increase in June, and economists expect wage growth in June of around 0.4%.
While the prospects of a strong economic recovery underpin equity markets, market participants remained nervous a sharp recovery from the pandemic might push up inflation to a level that is uncomfortable for the U.S. Federal Reserve.
"The situation remains uncertain and no one would have their forecast with high degree of confidence now. Markets will be very sensitive to any upticks in inflation," said Tomo Kinoshita, a market strategist at Invesco.
In bond markets, the 10-year U.S. yield was 1.466% - in part thanks to subsiding inflation expectations.
The dollar was perched at a 15-month high on the yen and at multimonth peaks against other big currencies Friday as traders bet strong U.S. labor data could lift it even further.
The dollar rose as high as 111.66 yen - its highest since March last year.
The euro slipped to a three-month low of $1.1837 overnight and was last at $1.1845.
The Australian dollar fell to $0.7461.
Oil prices held firm on indications that The Organization of the Petroleum Exporting Countries producers might increase output more slowly than expected in coming months while rising world fuel demand causes supply to tighten.
OPEC delayed its ministerial meeting until Friday to hold more talks on oil output policy, sources said Thursday, after the United Arab Emirates blocked a plan for an immediate easing of cuts and their extension to the end of 2022.
U.S. crude futures traded at $75.01 per barrel, having reached as high as $76.22 Thursday - the most since October 2018.
