Asia’s major stock indexes saw a mixed end to the week on Friday with a late Nasdaq surge bumping up Japan’s Nikkei but seeds of doubt over the pace of China’s post-Covid recovery weighing elsewhere.
The Nasdaq and S&P 500 ended higher overnight and touched roughly five-month highs, as a more dovish-than-expected message from US Federal Reserve Chair Jerome Powell boosted equities and Meta Platforms shares soared on rigorous cost controls.
That helped lift Tokyo’s Nikkei share average to a seven-week high, with Sony Group and others leading the charge after reporting strong growth outlook.
The Nikkei rose 0.39% to close at 27,509.46, its highest close since December 16. The index rose 0.46% for the week. The broader Topix edged up 0.26% at 1,970.26 but lost 0.6% for the week.
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However, China stocks ended lower, with foreign funds halting their buying spree after nearly one month of net inflows, as investors paused to examine the pace of China’s economic recovery.
Foreign money snapped a buying streak that started on January 4, selling a net 4.2 billion yuan ($622.74 million) of Chinese shares via the Stock Connect Scheme on Friday.
In a bright spot, China’s services activity in January expanded for the first time in five months as spending and travel got a boost from the lifting of stringent Covid curbs, sending business confidence to near 12-year highs.
China’s blue-chip CSI 300 Index closed down 1%, while the Shanghai Composite Index fell 0.68%, or 22.26 points, to 3,263.41. The Shenzhen Composite Index on China’s second exchange edged back 0.42%, or 9.21 points, to 2,163.28.
Shares in real estate developers, new energy firms and automobiles declined more than 1.5% each to lead the decline.
The Hang Seng Index fell 1.36%, or 297.89 points, to 21,660.47, while the Hang Seng China Enterprises Index dropped 1.6%.
The Hang Seng tumbled 4.5% this week to log its biggest weekly decline since the end of October.
Elsewhere across the region, Taipei was also down, while Singapore, Seoul and Wellington were flat. Sydney, Manila and Jakarta rose while Indian stocks advanced too with Mumbai’s signature Nifty 50 index up 1.38%, or 243.65 points, at 17,854.05.
Fed Chair’s ‘Disinflation’ Hope
The global picture was equally mixed, following weak earnings from US tech giants and as key US jobs data loomed.
The MSCI World Stock Index slipped 0.2%, but was still near its highest since last August following a sharp rebound in recent weeks on hopes that central bank rate hikes are nearing an end.
Wall Street stock futures fell sharply, with contracts on the tech-heavy Nasdaq 100 2% lower, on disappointing earnings from Google, Apple and Amazon. S&P 500 futures slid 0.9%.
Investors are also watching the fallout from this week’s plunge in shares of India’s Adani group, which continued to nosedive on Friday with market losses amounting to $115 billion in the wake of a US short-seller’s report.
In Europe, the Stoxx 600 share benchmark fell 0.6%. Germany’s benchmark 10-year bond yield inched 2 basis points higher to 2.097%, having on Thursday dropped by the most since 2011 as the price of the debt rallied.
This week, the US Federal Reserve, the European Central bank and Bank of England all increased benchmark borrowing costs and warned of more hikes to come.
Markets initially shrugged off the hawkishness, however, and clung to a statement by Fed chair Jay Powell on Wednesday that the United States was in the early stages of “disinflation.”
US Tech Shares Hammered
The mood turned much more cautious on Thursday, however, as US tech shares took a beating in US after-hours trading.
Apple projected another revenue decline in the start of the year, Amazon warned that its operating profit could fall to zero in the current quarter, and Google parent Alphabet missed expectations in its fourth-quarter profit and revenue.
The keenly watched US non-farm payrolls report, due out later on Friday, could now be crucial to supporting the recent rally.
“If we are seeing an easing of net job creation that would allow the Fed to just do one more rate hike of 25 basis points and that would be the end of the cycle,” said Willem Sels, global chief investment officer at HSBC’s private bank.
Treasury yields held largely steady. Ten-year Treasury yield were flat at 3.96%, while the two-year yield, which rises with traders’ expectations of higher Fed fund rates, rose 2 bps to 4.106%.
In the oil market, Brent crude futures reversed earlier gains and slid 0.6% to $81.58 per barrel, while US West Texas Intermediate crude was also down 0.6% at $75.28.
Key figures
Tokyo – Nikkei 225 > UP 0.39% at 27,509.46 (close)
Hong Kong – Hang Seng Index < DOWN 1.36% at 21,660.47 (close)
Shanghai – Composite < DOWN 0.68% at 3,263.41 (close)
London – FTSE 100 > UP 0.28% at 7,841.93 (0943 GMT)
New York – Dow < DOWN 0.11% at 34,053.94 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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