October 22, 2021

Asia tech shares jump, China property stocks rally as Evergrande makes payment

By ellen

TOKYO (REUTERS) – Tech stocks climbed in Asia on Friday (Oct 22) following Wall Street, while Chinese property stocks rallied following a surprise interest payment by debt-ridden property developer China Evergrande Group.

Meanwhile cyclical stocks dragged amid worries that central bankers will need to tighten monetary policy into slowing growth in order to tackle persistent inflation.

Regional bond yields rose with those on US Treasuries, where the market priced in higher inflation by narrowing the spread between short- and long-term yields, and pushing breakeven rates to the highest since 2012.

The US dollar held gains from overnight – when it rose the most since the start of last week against major peers – as better jobs and housing data boosted the case for a faster tapering of Federal Reserve stimulus and earlier interest rate hikes.

Japan’s Nikkei rose 0.7 per cent led by technology shares, while energy shares were the biggest drag. The broader Topix added 0.3 per cent, with a 0.6 per cent jump in the Topix growth index handily outpacing a 0.1 per cent advance for the value index .

Chinese blue chips gained 0.3 per cent, with the CSI300 Real Estate Index rising 2.5 per cent. Hong Kong’s Hang Seng rose 0.4 per cent, as an index tracking Hong Kong-listed mainland developers rallied 4.3 per cent.

Australia’s benchmark index slipped 0.2 per cent as commodity-linked shares fell.

Singapore’s Straits Times Index was 0.3 per cent at 11.20am local time.

China Evergrande Group wired funds to a trustee account on Thursday for a dollar bond interest payment due Sept. 23, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default. The stock jumped 5.4 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1 per cent.

Meanwhile, S&P 500 E-minis futures slipped 0.1 per cent after the cash index posted a record closing high overnight, led by surging tech shares.

The S&P 500 added 0.3 per cent, while the Nasdaq Composite rallied 0.6 per cent, although the Dow Jones Industrial Average edged slightly lower.

Next week, almost all the so-called FAANG giants report earnings: Facebook, Apple, Amazon, and Google-owner Alphabet. Netflix posted its results on Oct.19, and for the quarter that ended in September, diluted earnings-per-share came in at US$3.19, beating analyst expectations of US$2.57.

“The narrative over the last couple of days has been earnings focused and tech stocks have led the charge,” said Kyle Rodda, a market analyst at IG Australia. “There’s momentum there, simple as that.”

At the same time, he said concerns over growth and inflation has raised speculation that central banks will increase interest rates, potentially crimping growth, and that is weighing particularly heavily on cyclical shares.

Oil prices resumed their climb on Friday, after dropping back from multi-year highs reached earlier in the week, amid continued tightness in US supply.

Brent crude added 0.2 per cent to US$84.77, while US West Texas Intermediate crude rose 0.2 per cent to US$82.65.