Asian stock markets jittery as China woes sap confidence
Asian shares were on edge on Friday hurt by persistent uncertainty around the fate of debt-ridden China Evergrande, even as more risk appetite drove gains for Wall Street and U.S. benchmark Treasury yields.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) lost 0.1% and was set for a weekly loss of 0.68%. Australian (.AXJO) shares fell 0.41% while the Hong Kong benchmark (.HSI) was mostly flat.
Japan’s Nikkei (.N225) rose 1.93%, however, catching up on global gains after a public holiday. Chinese blue chips (.CSI300) reversed early losses to gain 0.6% after a cash injection from the central bank brought its weekly injection to 270 billion yuan ($42 billion) – the largest since January.
U.S. stock futures, the S&P 500 e-minis , were up 0.5%.
Ray Ferris, chief investment officer for South Asia at Credit Suisse, said that while investors were jittery about prospects for China due to woes in the property sector and a slew of regulatory changes, there was positive sentiment elsewhere.
“Growth in the large developed economies is above trend, likely to remain above trend and monetary policy remains very supportive of asset prices likely all the way through the middle of next year, he said.
“Every once in a while shocks to the system give us a correction, but these are more shallow than in the last several decades because of the weight of money out there that needs a home.”
That risk-on sentiment weighed on the dollar, which dropped sharply overnight against a basket of its peers , falling from near a one month high to a week low. It then rested in Asian hours. FRX
The yield on benchmark 10-year Treasury notes was also little changed in early Asian hours at 1.4267%, having risen to their highest in two and a half months after a rate rise by the Norwegian central bank and hawkish remarks from the Bank of England, both on Thursday, reinforced Wednesday’s hawkish remarks from the Federal Reserve’s policy committee.
Oil dropped back after hitting two-month highs the day before.
Gold regained some ground on Friday, with the spot price rising 0.5% to $1,751 per ounce having fallen over 1% the day before as higher yields hurt the non-interest bearing asset.