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Tuesday, December 6, 2022
Stocks & Shares

Chinese tech stocks drag markets lower in choppy trading

Chinese tech stocks

European futures pointed to a mixed open, with Euro STOXX futures last up 0.24%, and FTSE futures down 0.1%, while S&P 500 futures inched up 0.1%

Asian shares skidded on Friday, dragged down by declines in Chinese tech stocks, while elsewhere trading was choppy amid hawkish U.S. monetary policy, shifts in Chinese economic policy, and ongoing ructions in commodity markets amid the war in Ukraine.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.47%, but after earlier gains was nonetheless up 0.5% on the week, while Japan’s Nikkei was little changed, having closed the previous day at a nine-week high.

European futures pointed to a mixed open, with Euro STOXX futures last up 0.24%, and FTSE futures down 0.1%. S&P 500 future inched up 0.1%.

In Asia, the biggest tumbles were in Hong Kong, where tech stocks shed 2.5% as U.S. and Hong Kong dual-listed names took a hit from renewed fears that a row over audit records will force them to delist in the United States.

Australian stocks edged higher with miners to the fore, but Chinese blue chips fell 1.23%, as the benefits of last week’s political intervention began to wane.

In terms of Asia we have seen asset prices stabilise a little bit this week following last week’s statement from the Chinese vice premier. This may not be sustainable unless we see additional easing and have better visibility on the regulatory front, said Carlos Casanova, senior Asia economist at UBP.

Though what we are starting to see is a little more caution from global investors when it comes to the U.S. economy, and what that means for Asia, he added.

Last week, Chinese vice premier Liu He said Beijing would roll out support for the Chinese economy, sending Chinese and Hong Kong stocks higher initially.

Investors were also watching Japan, where the central bank refrained from stepping into the market to buy Japanese government bonds (JGB) on Friday morning even as its yield target came under pressure.

The yield on 10-year JGBs rose to 0.24% on Friday morning, exceeding the level at which the Bank of Japan had offered to buy an unlimited amount of JGBs at 0.25% on Feb. 10, part of a policy to maintain interest rates at their current ultra-low levels.

Japanese bond yields are being pulled higher by U.S. Treasury yields, which have risen along with expectations for a more aggressive pace of rate hikes by the U.S. Federal Reserve.

U.S. 10 year notes last yielded 2.3667% just off Tuesday’s 22-month high of 2.417%.

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