Shares retreated in Asia on Friday after a broad rally for stocks drove the S&P 500 index to an all-time high as weak manufacturing data from Japan helped dampen investor sentiment.
Japan’s Nikkei NIK, -0.95% retreated 1% and South Korea’s Kospi 180721, -0.27% slipped 0.7%. Hong Kong’s Hang Seng Index HSI, -0.41% gave up 0.5% as protesters again gathered in front of government offices. The Shanghai Composite SHCOMP, +0.50% rose 0.2% and the smaller-cap Shenzhen Composite 399106, +1.34% surged 0.9%.
Benchmark indexes in Taiwan Y9999, +0.17% and Singapore STI, +0.05% were steady, while Indonesia JAKIDX, -0.63% stocks fell 1.2%. Australia’s S&P/ASX 200 XJO, -0.55% fell 0.6%.
A preliminary survey of Japanese manufacturers, the IHS Markit flash purchasing managers index showed indicators dropping, with new orders at the lowest level in three years.
“A soft patch for automotive demand and subdued client confidence in the wake of U.S.-China trade frictions were often cited by survey respondents,” the report said.
Wall Street capped a broad rally for stocks Thursday by driving the S&P 500 SPX, +0.95% index to a fresh record, up 0.9% to 2,954.18, a record high. The Dow Jones Industrial Average DJIA, +0.94% also rose 0.9%, to 26,753.17. The Nasdaq COMP, +0.80% gained 0.8% to 8,051.34 and the Russell 2000 index RUT, +0.51% of smaller companies picked up 0.5% to 1,563.49.
Thursday’s rally came as investors balanced optimism over the possibility that the Federal Reserve will cut interest rates in response to a slowing global economy with jitters about the prospects of dimmer corporate profits should a severe slowdown take hold.
Those worries prompted traders to shift money into safe-haven assets this week, such as gold and U.S. government bonds. The yield on the 10-year Treasury briefly slid Thursday as low as 1.97% after falling a day earlier to 2.02%. The yield, which is used to set interest rates on mortgages and other loans, is the lowest it’s been since November 2016.
The price of gold GCQ19, -0.63% meanwhile, jumped 3.6%.
“If the Fed is going to cut rates it means that the economic environment is slowing down,” said Lindsey Bell, investment strategist at CFRA. “You have investors looking to bonds to hide out in. You’re also seeing a big move up in gold on the back of the Fed’s decision as well.”
The price of U.S. crude oil CLQ19, +0.68% fell back early Friday after jumping 5.4% overnight on fears that escalating tensions between the U.S. and Iran could cause oil shipments through the Strait of Hormuz to be compromised.
Iran’s Revolutionary Guard said it shot down a U.S. drone over Iranian airspace. U.S. officials said the drone had not violated Iranian airspace. The drone shooting follows an attack last week on two oil tankers near the Gulf of Oman.
Late Thursday, the New York Times reported President Donald Trump had approved, then canceled at the last minute, airstrikes against a handful of targets in Iran. It was unclear why the attack was called off, or whether they would be carried out at a later time.
Also late Thursday, the Federal Aviation Administration prohibited U.S. carriers from flying over Iranian-controlled parts of the Persian Gulf and Gulf of Oman, over fears of a jetliner accidentally being shot down.
Crude prices had been in a bear market just weeks ago, what Wall Street calls a drop of 20% or more.
Benchmark U.S. crude oil CLQ19, +0.68% lost 24 cents to $56.85 per barrel in electronic trading on the New York Mercantile Exchange, up from its close Thursday of $57.07. Brent crude oil , the international standard, gave up 12 cents to $64.33 per barrel. It rose 4.3% Thursday to close at $64.45 a barrel.
The dollar USDJPY, +0.11% fell to 107.08 Japanese yen from 107.28 yen on Thursday. The EURUSD, +0.0886% rose to $1.1296 from $1.1295.
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