Hong Kong’s Hang Seng fell nearly 2% on pressure on technology stocks; yen gets stronger

SINGAPORE – Hong Kong’s Hang Seng Index fell nearly 2% on Friday as technology stocks came under pressure.

The benchmark index fell 2.3%, while the Hang Seng Tech index was down 4.25%.

Heavyweights Alibaba and Mituan Hang Seng fell 5.8% and 5.21%, respectively. Alibaba is on track for its third consecutive session of losses after news earlier this week that several Ant Group executives have resigned from their position as partners in Alibaba.

Shares of Meituan plunged after the company was recalled by a market regulator in Hangzhou due to food safety and price competition.

Real estate shares in Hong Kong also fell on Friday.

This indicates that the government will not overspend on infrastructure projects to achieve this goal. Our view is that this is not a bad thing.

Chinese leaders hinted on Thursday that Beijing is unlikely to try to boost the economy, and lowered the country’s GDP target at “about 5.5%”.

“This suggests that the government will not overspend on infrastructure projects to achieve this goal. Our view is that this is not a bad thing,” ING said in a note on Friday.

“This would give the central government more space to solve the problem of incomplete construction projects,” the authors added.

In mainland China, the Shanghai Composite Index is down 0.72% and the Shenzhen Index is down 1.04%.

In addition, Beijing appears to be committed to its Covid-free policy.

“It seems to us that any change to the zero-Covid policy will only happen when the authorities are satisfied that mutations are less virulent and that vaccines/drugs are more effective,” wrote Betty Wang of ANZ Research, China’s chief economist. Zhaopeng Xing, one of the top strategists in China.

The yen and Australian strength

The Japanese yen strengthened sharply against the dollar on Friday, after weakening for months as Japan’s central bank policy diverged from that of the Federal Reserve.

“What we have definitely seen during the second half of this week is a significant rally in the US interest rate markets,” said Andrew Tishhurst, rates analyst at Nomura Australia.

“These interest rate differentials against Japan are narrowing and this is causing the dollar to fall against the yen,” he said. Treasury yields fell after a negative US GDP reading.

The yen was last traded at 133.19 per dollar.

The risk-sensitive Australian dollar also strengthened, last seen at $0.7015.

“The improvement in global risk sentiment over the past 48 hours, and the slight weakness we’ve seen in the US dollar have been positive factors for the Australian,” Tishhurst said.

The US Dollar Index, which measures the greenback against a basket of peers, was at 105.882.

Japan’s Nikkei 225 gave up gains to fall 0.28% while Topix shed 0.61%.

The Ministry of Economy, Trade and Industry said on Friday that the country’s industrial output jumped 8.9% in June compared to the previous month. The print surprised to the upside after falling in May.

Elsewhere, South Korea’s Kospi rose 0.49% and the Kosdaq advanced 0.47%.

Australia’s S&P/ASX 200 rose 0.9%.

Thailand market is closed for a holiday on Friday.

MSCI’s broadest index of Asia Pacific shares outside Japan lost 0.23%.

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US moves

Major US indices rose at least 1% each overnight.

The Dow Jones Industrial Average jumped 332.04 points, or 1%, to 32,529.63. The S&P 500 rose 1.2% to 4,072.43, and the Nasdaq Composite added nearly 1.1% to 12,162.59.

US futures rose after technology companies such as Apple and Amazon reported solid earnings.

The moves came despite the US Bureau of Economic Analysis announcing that gross domestic product fell 0.9% at an annualized pace for the April-June quarter, according to advance estimates. Gross domestic product declined by 1.6% in the first quarter of the year.

While this is the second consecutive negative GDP report, official statements about whether the US is in a recession come from the National Bureau of Economic Research. This decision may take months or even longer.

US crude rose 0.27% to $96.68 a barrel, while Brent crude was partially down at $107.04 a barrel.

CNBC’s Evelyn Cheng contributed to this report.

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