© Reuters. A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying (top) charts of the Nikkei index outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon
By Stella Qiu and Alun John
BEIJING/HONG KONG (Reuters) – Asian stocks followed a global share selloff on Friday, as European Central Bank rate hike guidance and nervousness over upcoming U.S. inflation data fueled growth concerns. global, while shares in China rose on hopes of monetary policy. loosening.
MSCI’s broader index of Asia-Pacific equities outside Japan fell 0.9%, pressured by a 1.2% drop in resource-heavy Australia and a 1.5% decline in South Korea. fell 1.4%.
The decline is likely to continue when European markets open. Pan-region is down 0.99%, German is down 0.92%, futures are down 0.87%.
However, continued strong buying from foreign investors and cautious hopes of regulatory easing on tech companies lifted China stocks on Friday despite news that the cities of Beijing and Shaanghai were back on COVID-19 alert. 19.
China’s CSI300 blue-chip index rose 0.41%, while Hong Kong stocks pared previous losses to 0.2%.
Hong Kong-listed tech giants, which took a heavy hit in early trading, reversed losses up 0.9%, boosted by a change of fortune in Hong Kong shares of alibaba (NYSE:), which rose 1.8%.
Reuters reported that Chinese officials have given billionaire Jack Ma’s Ant Group an interim green light to revive its initial public offering (IPO), following a Bloomberg report that China is considering reviving the IPO.
Despite denials from the company and the securities regulator, investors interpreted this as a sign that a long-running regulatory crackdown on tech companies is easing, in line with the broad accommodative stance of China’s top policymakers recently.
“It’s a sign that Beijing has come out to say they’ve gone from crackdown to support, so there’s not a lot of uncertainty anymore,” said Jason Hsu, founder and CIO of Rayliant Global Advisors.
“China is now starting to enter a circle of easing, which is definitely a good thing for the stock market. Stocks have gone down quite a bit before, so now they’re going to go up again and make up for the losses. I hope so.”
China’s factory gate inflation cooled to its slowest pace in 14 months in May due to tight COVID-19 restrictions, while consumer inflation also remained subdued.
That would allow China’s central bank to release more stimulus to prop up the economy, even as policymakers in most other countries struggle to contain inflation with aggressive increases in interest rates.
On Thursday, the European Central Bank said it would deliver its first interest rate hike since 2011 next month, followed by a potentially larger move in September.
“Global equities came under pressure after the ECB released its guidance and (ECB President Christine) Lagarde noted upside inflation risks,” analysts at ANZ said in a note on Friday.
“And with energy prices still rising, it’s still unclear whether inflation has peaked. Fed guidance and policy actions may have to become more aggressive for longer. Financial markets are nervous.”
Investors expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if Friday’s US consumer price data confirms high inflation.
The consensus forecast sees a year-over-year inflation rate for May of 8.3%, unchanged from April.
Wall Street stocks tumbled as the market awaited price data. The and Nasdaq fell more than 2% in their biggest daily percentage drops since mid-May.
In currency markets, the US dollar declined 0.2% against a basket of major currencies, moving away from its highest level in three weeks ahead of the US inflation report.
On Friday, the two-year yield, which has risen on traders’ expectations of higher Fed funds rates, continued its rise hovering around the highest level since early May. It touched 2.8352% compared to a US close of 2.817%.
The benchmark yield also rose slightly to 3.0568% from its US close of 3.042% on Thursday.
Oil prices fell after parts of Shanghai imposed new lockdown measures. fell 0.52% to $120.88 a barrel. fell 0.6% to $122.38 a barrel.
Gold tumbled on Friday and followed a weekly drop as Treasury yields rose. was trading at $1,844.58 an ounce. [GOL/]