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The Global Stock Rally Blocks in Asia

Asian stocks failed to reach a global record high on Friday due to Chinese real estate stocks. While the dollar stood firm a week later, central banks worldwide were wary of surprises. The U.S. currency has taken concrete steps against the sterling, which has collapsed after the Bank of England missed the chance to raise interest rates.

MSCI’s broadest Asia-Pacific stock index outside Japan fell 0.14% and was vulnerable this week. The Japanese Nikkei fell 0.7%, though it reached a one-month high the previous day as manufacturers’ profits were disappointing.

Stock markets, on the other hand, are in globally strong shape. MSCI shares traded at an all-time high worldwide on Thursday, hitting a fourth consecutive record high. The world rate was unchanged during the Asian hours, while futures in Europe and the U.S. were stable. Pan-regional Euro Stoxx 50 futures gained 0.08%, while the US S&P 500 e-minis remained unchanged.

The gains also came after the U.S. Federal Reserve finally announced it would begin cutting its massive asset-buying program on Wednesday. However, Federal Reserve Chairman Jerome Powell said he was in no hurry to increase borrowing costs.

According to Stefan Hofer, LGT’s chief investment strategist, although this process is essential for policy normalization, the Fed stressed that tapering is not tightening.

Hofer noted that this is indeed expert and well-crafted communication. He predicts that U.S. job data will remain in the spotlight in the coming months as it will affect the Fed’s future decisions. U.S. payroll data for October will be released later on Friday.

Asia Stocks

In Asia, the Hong Kong regional index fell 1.25%. It was under pressure from the heavyweight index HSBC as stock-sensitive bank shares fell 5%, hurt by BoE’s dovish call and property stocks.

At the same time, in Hong Kong, trading in shares of Chinese developers Kaisa Group Holdings Ltd was suspended. After the company said, the subsidiary had missed payment on a wealth management product. It is the latest sign of the deepening liquidity crisis in China’s real estate sector. The tracking index of mainland Chinese developers in Hong Kong fell by 2.4%, while the Chinese Inland Property Index lost 2%.

Shares in Shanghai lost 0.6%, although Chinese blue chips fell 0.3%. Most investors were satisfied with the Fed’s communications. However, some felt they had been misled by BoE policymakers, which surprised markets by postponing interest rate hikes at a meeting on Thursday.

On Friday, the pound cured its deficits to a one-month low, which fell 1.36% after a central bank decision the previous day, causing bonds to spread widely across Europe and the U.K.

Statistics and Global Background

The dollar index last stood at 94,327, against a 12-month high of October, after the U.S. currency also rose against the euro. In parallel with the move in European government bonds, the U.S. yield curve widened on Thursday. As a result, U.S. 10-year yields fell to 1.509%, the lowest level since mid-October. Revenue later partially recovered, and the 10-year bonds last stood at 1.5386%. Oil changed course and gave up early earnings on Friday.

US crude rose 0.34% to $79.05 a barrel. Brent oil fell 0.1% to $80.44 a barrel. The low for the next month was recorded a day earlier, after reports that Saudi Arabia’s production would soon exceed 10 million barrels per day during the first COVID-19 pandemic. Spot gold was up 0.1% as yields fell on interest-free assets.

The Canadian dollar weakened to 1.2463, while the New Zealand dollar fell to 0.7086. On Wall Street overnight, the Nasdaq Composite was still leading, at 0.81 percent, to a new record high of 15,940.31.

The Standard and Poor’s 500 gained 0.42 percent and set a new record at 4680.06. On the other hand, the Dow Jones industrial average fell 0.09 percent to 36,124.23.

 

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