Asian shares bounced back on Friday as hopes that China might reopen its economy after months of Covid shutdowns lifted the mood across trading floors.
There was also some optimism that there could be an easing in Sino-US tensions with progress being reportedly made in the long-running auditing row over Chinese companies listed in the US.
Mainland China and Hong Kong stocks surged, with the Hang Seng notching up its biggest weekly gain in 11 years, but Japan shares slipped with investors there focusing on the US Fed’s gloomy predictions on inflation.
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Wall Street stocks continued their slide on Thursday, a day after Fed Chair Jerome Powell quashed investor hopes for a dovish pivot by saying it was “very premature” to be thinking about pausing rate hikes.
That fed into Japan’s Nikkei share average which ended lower with investors in selling mood after returning from a national holiday, although the strong gains in Chinese stocks limited the losses.
The benchmark Nikkei 225 index dropped 1.68%, or 463.65 points to end at 27,199.74. The broader Topix index fell 1.29%, or 25.06 points, to 1,915.40.
Every sector fell, with rate-sensitive technology shares leading losses with a 2.23% drop. Energy fared best, slipping 0.34%, supported by higher crude prices.
Chinese markets soared, though, and the yuan rose, with about a trillion dollars added to the value of Chinese stocks in a week. MSCI’s broadest index of Asia-Pacific shares outside Japan was 2.07% higher on the day.
The Hang Seng surged seeing its biggest weekly gain since 2011 while the Shanghai Composite scored a 5.3% weekly gain, its largest in more than two years.
Gains were broad, defying a downbeat mood in global markets weighed by the prospect of US interest rates rising further than previously expected. Property and tech shares led the way.
China Covid Rules Rumours
The Hang Seng Index soared 5.36%, or 821.65 points, to 16,161.14. The Shanghai Composite Index gained 2.43%, or 72.99 points, to 3,070.80, while the Shenzhen Composite Index on China’s second exchange was up 2.68%, or 52.78 points, to 2,020.16.
Unsubstantiated social media posts flagging an aim to relax Covid rules in March have driven optimism all week and seemed to pick up new momentum on Friday.
Shares in online giants Alibaba and JD.com each rose more than 10% and the Hang Seng Tech index rose 7.5%. Property manager Country Garden Services rose 15% and an index of mainland developers rose 9%.
Elsewhere across the region, stocks were on the back foot after Wall Street fell for a fourth straight session overnight. Equities in the Philippines and Indonesia fell 0.9% and 0.6%, respectively. The Taiwan benchmark slid 0.3%.
Indian stocks advanced with Mumbai’s signature Nifty 50 index up 0.41%, or 74.65 points, to close at 18,127.35.
Investors Wait on US Payrolls Report
Globally, stocks have been rattled since comments from Fed Chair Jerome Powell on Wednesday that it was “very premature” to be thinking about pausing its rate hikes, putting a lid on any lingering investor hopes of a near term easing.
Investors will be keeping an eye on Friday’s US payrolls report where any upside surprise will likely reinforce the Fed’s hawkish outlook. Economists polled by Reuters expect non-farm payrolls to have increased by 200,000 jobs in October.
In the currency market, sterling was up 0.38% at $1.1207, after sliding 2% overnight when the Bank of England raised interest rates by the most since 1989, but warned a long recession looms.
The US dollar index, which measures the greenback against a basket of currencies, fell 0.292%, after surging 0.8% overnight and touching a roughly two-week high of 113.15.
Key figures
Tokyo – Nikkei 225 < DOWN 1.68% at 27,199.74 (close)
Hong Kong – Hang Seng Index > UP 5.36% at 16,161.14 (close)
Shanghai – Composite > UP 2.43% at 3,070.80 (close)
London – FTSE 100 > UP 0.92% at 7,254.72 (0935 GMT)
New York – Dow < DOWN 0.46% at 32,001.25 (Thursday close)
- Reuters with additional editing by Sean O’Meara
Read more:
Chinese Yuan Close to 15-Year Low After Fed Rate Hike
China Stocks Slump on US Rate Hike, Rising Covid Cases
