Asian shares on Chinese developer mixed and worries about virus
Asian stocks were mixed on Friday amid concerns over struggling Chinese real estate developer Evergrande and the pandemic.
Japan’s benchmark surged after reopening from Thursday’s National Day, but shares were little changed in South Korea and China.
On Wall Street, stocks broadly rose for a second straight day, reversing the week’s losses. Investors were happy to have obtained from the Federal Reserve the day before that it was not about to raise interest rates.
Evergrande Group’s announcement that it was making a payment due on Thursday helped allay concerns about whether it could default on its massive debt obligations.
Japan’s Nikkei 225 benchmark surged 1.9% in the morning session to 30,200.89. South Korea’s Kospi advanced less than 0.1% to 3,128.57. The Australian S & P / ASX 200 slipped 0.4% to 7,338.50. The Hong Kong Hang Seng gained 0.2% to 24,559.31, while the Shanghai Composite lost nearly 0.1% to 3,639.88.
Mizuho Bank’s Masayuki Tsunashima warned that there were still risks to the markets due to the potential problems of Evergrande. Protracted coronavirus outbreaks also pose risks, he said.
“So it cannot be ruled out that optimism remains fragile or, at the very least opportunistic, because the underlying risks have simply not been addressed, let alone put to bed,” he said. “And this is consistent with the fact that markets remain subject to volatility and negative shocks.”
On Wall Street, stocks rose for the second day in a row, reversing the sharp decline at the start of the week. The S&P 500 rose 1.2% to 4,448.98. Over 85% of the companies in the benchmark posted gains.
The Dow Jones gained 1.5% to 34,764.82, while the Nasdaq rose 1% to 15,052.24. The Russell 2000 rose 1.8% to 2,259.04. That’s up 1% for the week.
The rally put the main indices on the pace of weekly gains just four days after a large sell-off on Monday gave the S&P 500 its biggest slippage since May and sent the Dow down more than 600 points.
Large fluctuations in the market reflect how quickly investor sentiment can change. As the market hovers near all-time highs, traders tend to view waves of selling as buying opportunities.
Traders felt uneasy about how quickly the US Federal Reserve might choose to curb some of the support measures it has given to markets and the economy. Those concerns were allayed on Wednesday, when the Federal Reserve signaled that it would not start considering such a decrease in support until at least November, and indicated that it could start raising its benchmark interest rate on next year.
“The last few days have just been this recognition that all the things we talked about, the market ignored them,” said Michael Antonelli, managing director and market strategist at Baird, noting that the S&P 500 is only around. 1.5%. below its all-time high set earlier this month.
“The market was just ripe for a massive sale,” Antonelli said Monday. “We still haven’t had a 5% drop from highs this year.”
The Fed has said it will likely begin to slow the pace of monthly bond purchases made throughout the pandemic to help keep borrowing costs low “soon” if the economy continues to improve.
“The reality is that the Fed is going to be wrong in not tightening anything on inflation until it absolutely has to,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company.
Still, the markets had a tough September and investors could be more restless, Schutte said.
“People have gotten so used to a one-way market,” he said. “It will be more of a two-way market and investors need to get used to it, but I still think the trend is up.”
In energy trading, benchmark US crude oil fell 27 cents to $ 73.03 a barrel in electronic trading on the New York Mercantile Exchange. It gained $ 1.07 to $ 73.30 a barrel on Thursday.
Brent crude, the international standard, fell 24 cents to $ 77.01 a barrel.
In currency trading, the US dollar rose from 110.31 yen to 110.39 Japanese yen. The euro cost $ 1.1744, compared to $ 1.1740.