Asian shares went in different directions on Friday, reacting to the US banking sector’s woes, positive China data and pessimism over AI stocks.
The dollar eased and gold hovered near record highs, as investors worried that a rout in shares of US regional lenders earlier this week could herald more trouble for the banking sector.
As investors flocked to safe haven assets, spot gold moved closer to its record high and the yen appeared set for its first weekly gain in nearly a month.
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But while some were downbeat over US banks’ issues, others were betting on a turnaround in the US Fed’s tightening push which many have blamed for the increased pressure on lenders there.
Hong Kong stocks rose after data showed China’s services activity grew for a fourth consecutive month in April, while mainland China shares declined, dragged down by artificial intelligence-related companies.
China’s service activity grew in April, a survey showed on Friday, as businesses continued to benefit from a return to pre-pandemic levels of demand and output, although expansion slowed slightly.
The Hang Seng Index gained 0.50%, or 100.58 points, to 20,049.31.
The Shanghai Composite Index dropped 0.48%, or 15.96 points, to 3,334.50, while the Shenzhen Composite Index on China’s second exchange fell 0.80%, or 16.54 points, to 2,037.86.
Elsewhere across the region, in early trade, Sydney and Taipei were up, while Mumbai, Wellington, Jakarta, Singapore, Kuala Lumpur and Manila were down. Tokyo and Seoul were closed for holidays.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.44% higher and was on course to snap its two-week losing streak.
Shares of US regional banks sank this week after the collapse of First Republic Bank, bringing back worries of a widening banking sector crisis that began with the collapse of Silicon Valley Bank in March.
Wall Street ended lower on Thursday after Los Angeles-based PacWest Bancorp’s move to explore strategic options deepened fears about the health of US lenders as pressure grows on regulators to take more steps to shore up the country’s banking sector.
Shares of another regional lender Western Alliance pared losses after plummeting by nearly 60% on a Financial Times report that it was exploring strategic options. Western Alliance denied the report.
The turmoil in the banking sector comes as the Federal Reserve raised interest rates by 25 basis points on Wednesday but hinted that its marathon hiking cycle may be ending.
Markets are pricing for the Fed to stand firm at its next meeting in June before embarking on rate cuts from July, according to CME FedWatch tool.
US non-farm payroll data for April will be released later in the global day.
European stock markets looked set for a higher open, with Eurostoxx 50 futures up 0.42%, German DAX futures up 0.39% and FTSE futures up 0.33%.
On Thursday, the European Central Bank raised interest rates by 25 basis points to 3.25% and signalled that more tightening would be needed to tame inflation.
E-mini futures for the S&P 500 rose 0.35% after Apple Inc’s results beat expectations, helped by better-than-expected iPhone sales and notable inroads in India and other newer markets.
In the currency market, the Japanese yen strengthened 0.20% to 134.04 per dollar, on course for its first weekly gain in nearly a month.
Against a basket of currencies, the dollar eased 0.170% to 101.17.
Meanwhile, spot gold eased 0.1% to $2,049.68 an ounce, hovering close to its all-time high of $2,072.49.
US crude rose 0.77% to $69.09 per barrel and Brent was at $73.07, up 0.79% on the day. Still, oil prices were set for a third straight week of losses after markets witnessed dramatic drops on fears of a weakening US economy and slowing Chinese demand.
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index > UP 0.50% at 20,049.31 (close)
Shanghai – Composite < DOWN 0.48% at 3,334.50 (close)
London – FTSE 100 > UP 0.31% at 7,726.54 (0933 GMT)
New York – Dow < DOWN 0.86% at 33,127.74 (Thursday close)
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