Asian stocks were mixed on Friday, lower in China, but up in Hong Kong and other markets ahead of a much awaited address by US Federal Reserve chief Jay Powell.
Shares on mainland markets closed lower as Covid-19 outbreaks and property woes kept investor sentiment subdued, with energy suppliers and chipmakers leading the decline.
Hong Kong shares rose, buoyed by news of possible progress in China-US talks to hammer out an audit deal.
China’s CSI 300 index slipped by 0.2% at the close, while the Shanghai Composite Index also closed 0.3% lower.
The Hang Seng Index and the Hang Seng China Enterprises Index both added roughly 1%.
For the week, the CSI 300 index retreated 1%, while the Hang Seng Index added 2%, the most in two months.
Energy companies lost 2%, with coal miners down 2.7%, and semiconductors dropped 1.7%. The energy subindex still gained nearly 7% for the week, amid a shortage of power due to China’s longest and most widespread heatwave in decades.
China’s energy shortage could lead to higher demand for copper and aluminium as the power constraints highlighted the need for increasing grid investments, ANZ analysts said.
Hong Kong shares of PetroChina rose 3.3% after the company posted a record first-half profit, thanks to an increase in its oil and gas output and higher energy prices.
Meanwhile, the US and China appear to be nearing an agreement allowing American accounting regulators to inspect audit records of US-listed Chinese companies. Sources said Beijing has asked some US-listed Chinese companies and their audit firms to prepare for American inspections in Hong Kong.
The news also boosted other Asian shares, while traders anxiously awaited a speech from Federal Reserve Chair Jerome Powell for clues on rate hikes.
Japanese Shares Edge Up
Japanese shares ended slightly higher on Friday after erasing some of their earlier gains, as cautious investors awaited a speech by Federal Reserve chair Jerome Powell for fresh clues about the path of U.S. monetary policy tightening.
The Nikkei share average ended up 0.57% at 28,641.38, well off the morning session’s high of 28,792.93. The broader Topix also gave up some of its early gains to close 0.15% higher at 1,979.59.
The market were buoyed by a tech-led rally on Wall Street overnight, amid lower US bond yields as several Fed officials were non-committal about the size of interest rate hike they will approve at their meeting next month.
Powell will speak at the Fed’s annual symposium in Jackson Hole, Wyoming at 1400 GMT.
“It’s a difficult environment to take new positions,” a market participant at a securities firm said.
The Nikkei, however, still posted a 1% weekly drop, after a rally for three weeks. Of the Nikkei’s 225 component stocks, 134 rose versus 83 that fell, while eight were flat.
Industrials made up the best performing sector, followed by basic materials and tech. Energy was the biggest loser, following an overnight decline in crude oil prices.
Chipmaking equipment maker Tokyo Electron was the biggest mover by index points, adding 35 points to the benchmark with a 2.23% gain.
Startup investor SoftBank Group also rose 1.2%. It has a major holding in Alibaba, which rallied following the report on a US-China audit deal.
Australian Shares Rise
Australian shares closed higher for a third consecutive session, boosted by gains across all sectors, while focus shifts to the Powell speech at the Jackson Hole economic symposium.
The S&P/ASX 200 index ended 0.8% higher at 7,104.1 points at the close of trade. The benchmark edged lower for the week, snapping its five-week rally.
“Market sentiment next week will be substantially driven by the Fed’s comments tonight. We are also moving into seasonally weak September soon when the reporting season will be over and macro cycles will dominate markets,” said Mathan Somasundaram, founder and chief executive of Deep Data Analytics.
Miners and mining sub-index rose 1.1% for the day and added over 2% for the week. Sector giants BHP Group, Rio Tinto and Fortescue Metals Group gained between 1.4% and 3.8% through the session.
Energy stocks too showed strength on higher oil prices, rising 1.3% for the day and 6.3% for the week. Majors Santos and Woodside Energy Group jumped 1.2% each through the day.
Indian Shares Trim Gains
Indian shares gave up some gains and registered their first weekly loss in six, as investors maintained caution ahead of Powell’s speech on future interest rate hikes.
The NSE Nifty 50 index ended 0.2% higher at 17,558.9, while the S&P BSE Sensex closed 0.1% higher at 58,833.87, after rising as much as 0.9% each earlier in the session. They declined over 1% for the week, after five consecutive weeks of gains.
Christopher Wood, global head of equities at Jefferies, in a note published late Thursday, called India the best structural story in Asia by far.
“The reality is that the Indian market has so far surprised everyone by its resilience in the face of bearish sentiment triggered by the wave of foreign selling, prevailing high valuations and monetary tightening,” he wrote.
The Nifty 50 is up around 2.3% so far this month, after gaining 8.7% in July on easing crude prices and hopes of a slower pace of rate hikes.
New Delhi Television Ltd ended nearly 5% higher for a third consecutive day, as Adani Group contested claims by the news network that regulatory curbs restricted its founders from selling their stake.
- Reuters with additional editing by Jim Pollard