Asia Stocks Steady on Easing Bank Crisis Fears, Alibaba Lift

 

It was a day of low drama on Asia’s major stock indexes on Thursday with most markets hanging on to their gains as fears of a global banking crisis continued to ease.

Chinese tech giant Alibaba’s unit break-up plan also lifted sentiment on hopes it’s a signal that Beijing’s long-running regulatory tech assault might be coming to an end.

That boosted tech stocks on Wall Street which in turn boosted the mood in Japan but a clutch of stocks trading ex-dividend dragged the index down.

 

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Tokyo’s Nikkei share average finished lower after three straight sessions of gains, falling 0.36% to close at 27,782.93 while the broader Topix lost 0.61% to 1,983.32.

All but five of the Tokyo Stock Exchange’s 33 industry sub-indexes fell, with oil refiners leading the losses with a 2.89% drop. Heavyweight SoftBank Group fell 2.04% to become the biggest drag on the Nikkei, after jumping more than 6% in the previous session.

Hong Kong stocks edged up, after seeing sharp gains in the previous session following Alibaba’s restructuring plan, while shares in China inched up too ahead of manufacturing activity data due this week.

China’s economic performance has improved in March from the first two months and the country will expand domestic demand and consolidate its economic recovery, Premier Li Qiang said on Thursday at an economic forum in Boao. 

The Hang Seng Index gained 0.58%, or 116.73 points, to 20,309.13.

The Shanghai Composite Index rose 0.65%, or 21.19 points, to 3,261.25, while the Shenzhen Composite Index on China’s second exchange edged up 0.23%, or 4.92 points, to 2,108.29.

MSCI’s index of Asia-Pacific shares outside Japan rose 0.2%.

 

Bonds Benefit From SVB Collapse

Globally, stocks were on course for a 4.9% quarterly gain with US and European stock futures broadly steady.

Calmer markets mean investors can now afford to focus more on economics, with German, Spanish and Italian inflation data due later in the day.

On Wednesday, Wall Street indexes had jumped after the US banks’ top regulator appeared before Congress and focused remarks on failures at Silicon Valley Bank and its supervision, rather than broader systemic across the financial sector.

The US dollar was firm, particularly against the safe-haven Japanese yen as investors wound back some of the positions built up in the last couple of weeks. The yen last traded at 132.59 to the dollar.

As the dust settles on a wild and volatile ride after Silicon Valley Bank’s collapse unleashed fears of a broader banking crisis, the winners appear to be bonds and large tech companies that tend to benefit when interest rates fall.

From the two-year tenor all the way to the 30-year, US yields are below the current Fed funds rate of roughly 4.8% as markets have dramatically re-priced the rates outlook.

Two-year yields are down 30 basis points for the quarter, the first quarterly fall since March 2020. The rates-sensitive Nasdaq is up nearly 14% this year and heading for its best quarter in more than two years.

 

Alibaba Break-Up Boost

In Asia, investors were cheering plans from Alibaba to spin off and separately list its business units as another signal that China wants to welcome back global capital.

“We have repeatedly emphasised that 2023 is the first time in four years that economic, regulatory, and Covid policies have been aligned in a pro-growth, pro-business fashion,” Morgan Stanley analysts said.

“The swift announcement of [Alibaba’s] business restructuring yesterday effectively served as the ultimate stamp of reassurance that regulatory tightening has ended.”

The breakup will transform the conglomerate into a holding company, rather than an operational one, chief executive Daniel Zhang said on a Thursday conference call. 

Elsewhere, in commodity trade, Brent oil futures steadied at $77.95 a barrel and gold, which has surged over the past few weeks, was under gentle pressure at $1,962 an ounce.

The euro was steady at $1.0844, while bitcoin topped $29,000 and was set for its best quarter for two years.

 

Key figures

Tokyo – Nikkei 225 < DOWN 0.36% at 27,782.93 (close)

Hong Kong – Hang Seng Index > UP 0.58% at 20,309.13 (close)

Shanghai – Composite > UP 0.65% at 3,261.25 (close)

London – FTSE 100 > UP 0.51% at 7,602.77 (0934 GMT)

New York – Dow > UP 1.00% at 32,717.60 (Wednesday close)

 

• Reuters with additional editing by Sean O’Meara

 

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