Hong Kong, Oct 25 (BNA): Asian stocks rose on Monday ahead of a week filled with major quarterly earnings announcements, although news of China’s property tax experiments weighed on the Hong Kong and mainland markets.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.26% while Japan’s Nikkei lost 1% on the back of weak earnings from several local companies.
Australian shares rose 0.47%, supported by miners, while shares in South Korea rose 0.5%, although those gains were balanced by calmer moves in Greater China, according to Reuters.
China’s blue-chip stocks stabilized, despite the real estate index down 3%, while the Hong Kong benchmark rose 0.18% despite the Hong Kong-listed real estate index down 2.6%.
The drop in real estate shares followed the announcement on Saturday by the top decision-making body in China’s parliament that it would introduce a pilot property tax in some regions.
Real estate developer China Evergrande Group, which was embattled last week, appeared to avoid a costly last-minute bond-coupon default, and Reuters reported on Monday that some bondholders have received payments.
“Although there is some news on the Evergrande front, I think we will see more pressure on the real estate sector, particularly the smaller companies,” said Carlos Casanova, Asia economist at UBP, referring to the authorities’ efforts to ensure housing prices are corrected. Expansion of pilot property tax plans at a time when many real estate companies have bonds due in the coming months.
Also on the investors’ minds are a series of company earnings due this week. HSBC and Facebook will publish quarterly results on Monday, in Asian and late US trading, respectively.
Later in the week, it will be the turn of other record heavyweights including tech giants Microsoft, Apple and Alphabet, and European and Asian financial giants from Deutsche Bank and Lloyds to China Construction Bank and Nomura.
“This week’s earnings are taking center stage,” Chris Weston, head of research at the Melbourne-based brokerage Pepperstone, said in a morning note.
Results will be closely watched after the strong start of the US earnings season for many companies, especially financial, which helped both the Dow Jones Industrial Average and the S&P 500 reach record levels last week, despite the Nasdaq’s decline on Friday after Snap and Intel Corp. Quarterly results disappointed.
The risk-friendly mood that supported stocks weighed on safe haven currencies, as did higher energy prices, which supported currencies including the Australian and Canadian dollars.
The dollar index was last at 93.521, down 0.15% on the day, heading towards its monthly low of 93.455 hit last week, and away from a 12-month high in mid-October.
Traders are awaiting the US third-quarter GDP numbers due on Thursday with the weak reading likely to weigh on the dollar, according to analysts at CBA.
In contrast, UBP’s Casanova said a strong reading could push record US yields higher and lead to a faster-than-expected tightening by US policy makers.
Markets are still trying to position themselves in a widely expected stable position for the US stimulus program this year, and the possibility of a rate hike in late 2022.
Federal Reserve Chairman Jerome Powell said on Friday that the US central bank should begin the process of reducing its support for the economy by reducing its asset purchases, but it should not touch interest rates yet.
With tapering nearing, US benchmark yields soared and 10-year Treasury yields hit a five-month high of 1.7064% last week. In early Asia the last time was 1.6421%.
Oil prices rose on Monday, extending gains ahead of the weekend, with US crude reaching a seven-year high as global supplies remained tight amid strong demand worldwide.
Brent crude rose 0.88 percent to $86.28 a barrel, while US crude rose 1.11 percent to $84.69, a new seven-month high.
Spot gold rose 0.3% to $1,797 an ounce, after posting gains in the past two weeks on mounting inflation fears.
Bitcoin, another asset often described as an inflation hedge, was last seen at $61,901, up 1.6% after turbulent trading last week when it hit a new high of $67,016.
HF