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Asia Stocks Mixed as China Tech Weighs; Oil Climbs: Markets Wrap

Sunil Jagtiani
·3 min read
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(Bloomberg) -- Asian stocks were mixed Friday amid a drop in Chinese technology stocks, while Treasuries and the dollar were steady as traders evaluated the risk of faster monetary tightening to fight high inflation.

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Equities fluctuated in Japan and China but retreated in Hong Kong, where Alibaba Group Holding Ltd. contributed to a slide in a key tech gauge. Alibaba slashed its outlook for fiscal 2022 revenue amid intensifying competition, dwindling consumer spending and Beijing’s regulatory curbs.

China’s tech travails contrast with an overnight rally in a clutch of megacap U.S. tech firms. That helped lift the Nasdaq 100 and S&P 500 to record highs in a choppy session ahead of Friday’s options expiration. U.S. futures edged up.

Treasuries were little changed, while a dollar gauge remained on course for a fourth weekly advance. The latest Treasury bill auctions signaled investors are starting to demand more yield to hold the shortest-maturity debt, as the drama over lifting or suspending the U.S. debt ceiling returns.

Global stocks continue to hover near records, propped up by corporate earnings growth, particularly in the U.S. Such company performance has helped to cushion concerns that price pressures will hamper the economic recovery from the pandemic in part by forcing faster interest-rate hikes.

“You can come up with a very strong list of reasons why you shouldn’t be invested,” Kristen Bitterly, regional head of investments for North America at Citi Private Bank, said on Bloomberg Television. “The best way to combat that is really with the record-high profitability that we’ve seen and to recognize that not all parts of the market are created equal.”

Rate-Hike Bets

More strategists are predicting a faster pace of Federal Reserve policy tightening. For instance, TD Securities strategists followed those at Citigroup Inc. and Morgan Stanley in recommending eurodollar trades that pay off if the Fed raises rates more aggressively than currently expected.

Meanwhile, lawmakers in the U.S. House of Representatives are due to vote on President Joe Biden’s approximately $2 trillion economic plan. The bill’s fate in the Senate is still uncertain. Traders are also monitoring for Biden’s pick for Fed chair nominee from Governor Lael Brainard and incumbent Jerome Powell.

Elsewhere, China Beige Book International Chief Executive Officer Leland Miller, speaking on the sidelines of the Bloomberg New Economy Forum in Singapore, warned that China’s economy is slowing more than people think.

Crude oil edged up toward $80 a barrel, as the wait continues to see if the U.S. will join China in planning to tap strategic reserves. Gold advanced, and Bitcoin extended a slide, dropping to about $57,000.

What to watch this week:

  • Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference. Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.1% as of 10:38 a.m. in Tokyo. The S&P 500 rose 0.3%

  • Nasdaq 100 futures increased 0.1%. The Nasdaq 100 rose 1.1%

  • Japan’s Topix index rose 0.1%

  • South Korea’s Kospi increased 0.1%

  • Australia’s S&P/ASX 200 index was little changed

  • Hong Kong’s Hang Seng index lost 1.5%

  • China’s Shanghai Composite index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was steady

  • The euro was at $1.1359

  • The Japanese yen was at 114.28 per dollar

  • The offshore yuan was at 6.3834 per dollar

Bonds

  • The yield on 10-year Treasuries was little changed at 1.59%

  • Australia’s 10-year bond yield rose two basis points to 1.81%

Commodities

  • West Texas Intermediate crude added 0.2% to $79.13 a barrel

  • Gold was at $1,861.06 an ounce, up 0.1%

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