SINGAPORE (Portal) – Asia’s stock markets posted recent gains on Thursday, as fears of a banking crisis receded and investors weighed whether a dissolution of Chinese conglomerate Alibaba signals Beijing’s regulatory onslaught on tech companies may finally be easing.
The MSCI index of Asia Pacific equities outside Japan (.MIAPJ0000PUS) was up 0.2%. Like the S&P 500 (.SPX), it has recovered from the March lows as the impact of the Silicon Valley bank collapse rebounded on global markets.
Global equities (.MIWD00000PUS) are on course for a quarterly gain of 4.9%. Japan’s Nikkei (.N225), on course for a quarterly gain of 6%, slipped 0.8% on Thursday. US and European stock futures were broadly stable.
Calmer markets mean investors can now focus more on the economy as German, Spanish and Italian inflation figures come out later in the day.
On Wednesday, Wall Street indices had jumped after the top US banking regulator appeared before Congress and focused on failings at Silicon Valley Bank and its oversight, rather than broader systemic aspects of the financial sector.
The US dollar was firmer, particularly against the safe-haven Japanese yen, as investors trimmed some of the positions they had built up over the past few weeks.
The yen was last traded at 132.59 against the dollar.
As the dust settles on a wild and volatile ride after the collapse of Silicon Valley Bank sparked fears of a broader banking crisis, the winners appear to be bonds and big tech companies, which tend to benefit from falling interest rates.
From the 2-year to the 30-year, US yields are below the Fed’s current benchmark rate of around 4.8% as markets have dramatically reassessed the interest rate outlook.
Two-year yields fell 30 basis points over the quarter, the first quarterly decline since March 2020.
The rate-sensitive Nasdaq (.IXIC) is up almost 14% this year and is heading for its best quarter in more than two years.
“Bond markets were at one point dizzyingly volatile; US bonds were priced in with rate cuts beginning in June,” Barclays analysts said in a quarter-end note.
“(But) in times of real fear, investors are turning to the US dollar; in March, the euro appreciated against the US dollar. And there is no sign of funding pressures in US money markets or cross-currency swaps,” they said.
“The global economy took a hit in March, and a significant one at that. But that’s a blow, not a wall.”
ALIBABA
In Asia, investors are hailing Alibaba’s (9988.HK) plans to spin off its business units and list them separately, in another signal that China is ready to welcome global capital back.
“We have repeatedly emphasized that 2023 marks the first time in four years that economic, regulatory and COVID policies have been aligned in a pro-growth and business-friendly manner,” Morgan Stanley analysts said.
“Yesterday’s swift announcement of (Alibaba’s) business restructuring effectively served as the ultimate confirmation that the regulatory tightening is over.”
The dissolution will turn the conglomerate into a holding company rather than an operating one, CEO Daniel Zhang said in a conference call Thursday. Alibaba shares in Hong Kong, which were above HK$300 in 2020, rose 1.5% to HK$96 on Thursday. The wider Hang Seng (.HSI) was flat.
Elsewhere in commodities trading, Brent oil futures stabilized at $77.95 a barrel and gold, which has risen sharply in recent weeks, was under mild pressure at $1,962 an ounce.
The euro held steady at $1.0844 while bitcoin topped $29,000 and was set for its best quarter in two years.
Reporting by Tom Westbrook; Adaptation by Sonali Paul and Sam Holmes
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