Asian markets traded mixed early on Friday, amid lower oil prices and caution ahead of all-important US June non-farm payrolls data.
The S&P/ASX 200 was down 0.17 per cent, weighed by its materials subindex, which was lower by 0.42 per cent, and its heavily-weighted financial subindex, which fell by 0.17 per cent.
In Japan, the Nikkei 225 was up 0.74 per cent; while across the Korean strait, the Kospi was effectively unchanged.
US crude prices dropped 4.83 per cent to $45.14 (S$60.92) a barrel on Thursday after an Energy Information Administration (EIA) report showed stockpiles fell 2.2 million barrels in the week to July 1, far less than the 6.7 million barrel drawdown the American Petroleum Institute reported on the previous day.
"Oil will be front and centre in the Asian session...The real focus in the market is the lack of decline seen in gasoline inventories," explained IG market strategist Angus Nicholson. "Summer driving season in the US will end within the next two months, which is when demand for gasoline is at its highest, and yet gasoline inventories are not declining as expected.
"This is developing into a major concern for the oil market because once the seasonal demand disappears, gasoline inventories could be set to explode in the second half of the year," he added.
Meanwhile, Japan's May current account surplus stood at at 1.81 trillion yen ($17.96 billion), dipping 3.72 per cent from a month earlier, Reuters reported. The stronger yen curbed gains from investment overseas, but tourism income hit a record high.
US June non-farm payrolls are due later in the day and investors will watch for signs that May's disappointing headline figure of 38,000 was an anomaly. Friday's data is expected to show a rebound to 175,000 nonfarm payrolls, according to Thomson Reuters - a number that will likely influence the Federal Reserve's easing bias for the rest of the year. "Most economists and investors expect a strong recovery in job growth after last month's hauntingly weak report," said Kathy Lien, managing director of FX strategy at BK Asset Management in a Friday note. "With such a view, we would normally expect the dollar to be trading higher against the yen but instead of rising, USD/JPY fell for the fifth trading day in a row,"
The Japanese yen, a safe-haven currency, traded at 100.81 against the dollar early on Friday, compared to levels near 103 a week ago. Meanwhile, a lower finish on Wall Street could also weigh on sentiment in Asia. The Dow Jones industrial average finished lower 0.13 per cent, the S&P 500 ended near flat and the Nasdaq composite finished up 0.36 per cent, its sixth positive session in seven days.