Asian tech shares jump as Chinese property stocks edge higher

Tokyo — Tech stocks climbed in Asia on Friday, following US peers higher, while Chinese property stocks rallied after a surprise interest payment by debt-ridden property developer China Evergrande Group.

Cyclical stocks meanwhile dragged amid worries that central bankers will need to tighten monetary policy into slowing growth to tackle persistent inflation.

Regional bond yields rose with those on US Treasuries, where the market priced in higher inflation by narrowing the spread between short- and long-term yields, and pushing break even rates to the highest since 2012.

The dollar held gains from overnight — when it rose the most since the start of last week against major peers — as better jobs and housing data boosted the case for a faster tapering of Federal Reserve stimulus and earlier interest rate hikes.

Japan’s Nikkei rose 0.7% led by technology shares, while energy shares were the biggest drag. The broader Topix added 0.3%, with a 0.6% jump in the Topix growth index handily outpacing a 0.1% advance for the value index .

Chinese blue chips gained 0.3%, with the CSI300 Real Estate Index rising 2.5%. Hong Kong’s Hang Seng rose 0.4%, as an index tracking Hong Kong-listed mainland developers rallied 4.3%.

Australia’s benchmark index slipped 0.2% as commodity-linked shares fell.

China Evergrande Group wired funds to a trustee account on Thursday for a dollar bond interest payment due on September 23, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default. The stock jumped 5.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1%.

Meanwhile, S&P 500 E-minis futures slipped 0.1% after the cash index posted a record closing high overnight, led by surging tech shares.

The S&P 500 added 0.3%, while the Nasdaq Composite rallied 0.6%, though the Dow Jones Industrial Average edged slightly lower.

Next week, almost all the so-called FAANG giants report earnings: Facebook, Apple, Amazon, and Google-owner Alphabet. Netflix posted its results on October 19, and for the quarter that ended in September, diluted earnings per share came in at $3.19, beating analyst expectations of $2.57.

“The narrative over the last couple of days has been earnings focused and tech stocks have led the charge,” said Kyle Rodda, a market analyst at IG Australia. “There’s momentum there, simple as that.”

At the same time, he said concerns over growth and inflation has raised speculation that central banks will increase interest rates, potentially crimping growth, and that is weighing particularly heavily on cyclical shares.

Oil prices resumed their climb on Friday, after dropping back from multiyear highs reached earlier in the week, amid continued tightness in US supply.

Brent crude added 0.2% to $84.77 while US West Texas Intermediate crude rose 0.2% to $82.65.

The number of Americans filing new claims for unemployment benefits dropped last week to a 19-month low, data showed overnight, pointing to a tighter labour market.

Yields on benchmark 10-year Treasury notes were at 1.6922%, holding close to a five-month high of 1.7050% reached overnight. Two-year yields at 0.4484% were also close to the overnight high of 0.4560%, a level not seen since March of last year.

The dollar index, which gauges the greenback against six major rivals, was largely flat at 93.730 on Friday, maintaining the previous session’s 0.2% gain.

The Fed has signalled it could start to taper stimulus as soon as next month, with rate hikes following late next year.

Federal Reserve chair Jerome Powell speaks later on Friday in a panel discussion.

Reuters