Asian stocks rallied on Friday following a traumatic week on trading floors as bargain hunting offset worries over Ukraine, Covid, inflation and rising interest rates.
Tokyo, Hong Kong and mainland China equities all bounced back with traders buying the dip as fears of a worldwide recession deepened with prices soaring worldwide and supply chains snarled.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up almost 2% from Thursday’s 22-month closing low, trimming its losses for the week to less than 3%.
China stocks rose after Shanghai’s authorities said it aimed to reach the zero-Covid level in areas outside its tightly regulated quarantine zones this month, while authorities’ pledges to support the economy also lifted sentiment.
Shanghai’s deputy mayor, Wu Qing, said in a news conference that “victory” was getting closer but the fight against China’s biggest-ever Covid outbreak “still requires the joint exertions of every citizen.”
Wu also said Shanghai would start to steadily ease traffic restrictions and open shops this month, while Beijing on Thursday denied rumours of sweeping lockdown measures and urged people to avoid panic buying essential items and stay at home.
The Covid-19 resurgence is having a “huge impact” on China’s economy but that would be short-lived, the official Xinhua news agency quoted deputy head of the National Bureau of statistics as saying on Thursday.
China’s blue-chip CSI300 index rose 0.8% to 3,988.60, while the Shanghai Composite Index gained 0.96% to 3,084.28 points.
For the week, the CSI300 index gained 2%, its biggest jump in six weeks since Shanghai entered a city-wide lockdown, while the Shanghai Composite Index climbed the most in three months, up 2.8%.
Real estate developers jumped 4.9%, while automobiles surged 6.6% and coal miners added 3.4%.
Dollar Pulls Back From 20-Year Highs
Bargain-hunters were out in force in Tokyo as the benchmark Nikkei 225 index ended up 2.64%, or 678.93 points, at 26,427.65, while the broader Topix index climbed 1.91%, or 35.02 points, to 1,864.20.
The Hang Seng Index surged 2.68%, or 518.43 points, to 19,898.77, while the Shenzhen Composite Index on China’s second exchange rose 0.51%, or 9.80 points, to 1,931.45.
Indian stocks edged back though with Mumbai’s signature Nifty 50 index down 0.16%%, or 25.85 points, to close at 15,782.15.
Globally, stocks recovered from the previous day’s 18-month lows and the dollar pulled back from 20-year highs on Friday, though investors remained nervous.
Markets are becoming anxious about the possibility of recession, with the S&P getting close to a bear market on Thursday, at nearly 20% off its January all-time high.
In an interview late on Thursday, US Federal Reserve chair Jerome Powell said the battle to control inflation would “include some pain.” Powell repeated his expectation of half-percentage-point interest rate rises at each of the Fed’s next two policy meetings, while pledging that “we’re prepared to do more.”
Bitcoin Turns Around After Plunge
MSCI’s world equity index rose 0.32% after hitting its lowest since November 2020 on Thursday, though it was heading for a 4% fall on the week, its sixth straight week of losses.
S&P futures bounced 1.13% after the S&P index dropped 0.13% overnight, with the index also eyeing a sixth straight week of declines.
The US dollar eased 0.22% to 104.54 against a basket of currencies, but remained close to 20-year highs due to safe haven demand.
Cryptocurrency bitcoin also turned higher, cracking through $30,000 after the collapse of TerraUSD, a so-called stablecoin, drove it to a 16-month low of around $25,400 on Thursday.
The moves higher in equities were mirrored in US Treasuries, with the benchmark US 10-year yield edging up to 2.9221% from a close of 2.817% on Thursday.
Key figures at around 0720 GMT
Hong Kong – Hang Seng Index > UP 2.7% at 19,898.77 (close)
Shanghai – Composite > UP 0.9% at 3,084.28 (close)
London – FTSE 100 > UP 0.7% at 7,287.09
Tokyo – Nikkei 225 > UP 2.6% at 26,427.65 (close)
West Texas Intermediate > UP 0.7% at $106.88 per barrel
Brent North Sea crude > UP 1.0% at $108.53 per barrel
New York – Dow: DOWN 0.3% at 31,730.30 (Thursday close)
- Reuters with additional editing by Sean O’Meara