By Alun John
HONG KONG (Reuters) – Chinese markets trailed on Asian stocks on Friday as they failed to hold on to a world record rally after a week in which central banks around the world refrained from any hawkish surprise in a boost to the dollar.
The US currency made solid progress against the British pound, which was beaten after the Bank of England puzzled markets with a chance to raise interest rates on Thursday.
The MSCI’s largest Asia-Pacific stock index outside of Japan fell 0.26% as it slipped 0.5%, albeit from the month’s high reached the previous day.
Hong Kong weighed on the regional index, down 1.25%, under pressure from the heavyweight HSBC index as the rate-sensitive bank’s shares fell nearly 5%, penalized by l accommodating call from the BoE, as well as by real estate stocks.
Also in Hong Kong, trading in shares of Chinese developer Kaisa Group Holdings Ltd was put on hold, a day after the company said a subsidiary missed payment for a wealth management product, the latest sign of failure. ‘a growing liquidity crisis in the Chinese real estate sector.
An index that tracks Hong Kong-listed mainland developers slipped 1.5% and spreads on Chinese high-yield dollar debt approached record highs.
Shanghai stocks lost 0.24% while Chinese blue chips edged up 0.1%.
In contrast, Australia was to record its best week since the end of May and was up 0.5% on the day.
Global equity markets were strong, with the gauge of MSCI stocks across the globe hitting a new all-time high on Thursday. It edged down 0.1% at the start of Asia.
Overnight, the Nasdaq and Nasdaq extended their record-breaking streaks to six sessions, and the Nasdaq posted a small loss, ending a string of record-breaking closings after bank stocks weighed in. [.N]
The gains came even after the U.S. Federal Reserve finally announced on Wednesday that it would start scaling back its massive asset purchase program, although Fed Chairman Jerome Powell said he was not. in no hurry to increase borrowing costs.
“Even if it went as planned, this is an important step, the direction of the trip is now clearly towards policy normalization, although the Fed has stressed that the reduction will not tighten”, said Stefan Hofer, chief investment strategist for LGT in Asia-Pacific.
“It was really expert communication and very well managed”
Hofer said U.S. jobs data will remain on the agenda for the next few months as it will influence the Fed’s upcoming decisions. US wage data for October is due later on Friday.
One of the biggest surprises this week came from the Bank of England’s shocking decision on Thursday to postpone an interest rate hike.
That sent the pound down 1.36% on Thursday as bond yields fell in both Britain and Europe with the German 10-year government bond yield, the benchmark for the eurozone, in down 6 basis points to a one-month low of -0.23%.
The latest stood at 94.353 in view of 12-month October highs.
Yields on US Treasuries also fell and the US yield curve steepened overnight.
US 10-year benchmark yields fell to 1.509%, their lowest level since mid-October on Thursday, but gained ground and were last at 1.5367%.
Oil prices rebounded on Friday, regaining some ground from monthly lows reached a day earlier, after a report that Saudi Arabia’s oil production will soon exceed 10 million barrels per day for the first time since the start of the COVID-19 pandemic.
rose 1.03% to $ 79.62 per barrel, while it was up 1% to $ 81.18 per barrel. [O/R]
gained 0.17% as lower yields supported the non-interest bearing asset.