HONG KONG, Nov. 5 (Reuters) – Chinese markets pulled down 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 largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) fell 0.26% while Japan’s Nikkei (.N225) slipped 0.5%, although against the high of the month reached the day before.
Hong Kong (.HSI) weighed on the regional index, falling 1.25%, under pressure from the heavyweight HSBC index as the rate-sensitive bank’s shares fell nearly 5%, penalized by the accommodating call of the BoE, as well as by real estate actions.
Also in Hong Kong, trading in shares of Chinese developer Kaisa Group Holdings Ltd (1638.HK) was suspended, a day after the company said a subsidiary missed a payment on a wealth management product, the latest sign of a worsening liquidity crisis in the Chinese real estate sector. Read more
An index listing mainland Chinese developers listed in Hong Kong (.HSMPI) slipped 1.5%, and spreads on Chinese high-yield dollar debt (.MERACYC) hovered near record levels.
Shanghai stocks (.SSEC) lost 0.24% while Chinese blue chips (.CSI300) edged up 0.1%.
In contrast, the Australian S & P / ASX 200 (.AXJO) was expected to record its best week since late May and was up 0.5% on the day.
Global equity markets were strong, with MSCI’s global stock gauge (.MIWD00000PUS) hitting a new all-time high on Thursday. It edged down 0.1% at the start of Asia.
Overnight, the S&P 500 and Nasdaq extended their record-breaking streaks to six sessions, and the Dow Jones Industrial Average posted a small loss, ending a string of record-breaking close after bank stocks weighed in.
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 though it went as planned, this is an important step, the direction of travel 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. Read more
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 dollar index last stood at 94.353 ahead of 12-month October highs.
US Treasury yields 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.
US crude rose 1.03% to $ 79.62 per barrel, while Brent crude rose 1% to $ 81.18 per barrel.
Spot gold climbed 0.17% as lower yields supported the non-interest bearing asset.
Editing by Shri Navaratnam
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