Energy shares lift Hang Seng; new US sanctions trip China stocks

Asian stocks rose on Friday, registering a third week of gains, as US unemployment claims data stoked optimism around interest rate cuts this year ahead of next week’s crucial inflation data.

Most Asian bourses tracked overnight gains on Wall Street, with the Hang Seng Index leading the pack with gains of more than 2%.

Large gains in energy, finance and property stocks fuelled Hang Seng’s surge. The sub-index of the Hang Seng tracking energy shares rose 4.1%, while the the financial sector ended 3.59% higher and the property sector rose 3.79%.

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Reports that China was considering a proposal to exempt individual investors from paying dividend taxes on Hong Kong stocks bought via Stock Connect also lifted Hong Kong shares.

The Hang Seng China Enterprises index rose 2.41% to 6,718.86.

Property shares led gains on Friday after Hangzhou and Xian, two Chinese provincial capitals lifted all home purchase restrictions on Thursday to lure buyers and shore up their sagging real estate markets, raising the prospect of other megacities following suit.

Chinese stocks closed flat, however, with investor sentiment dented by an expanded trade restriction list issued by the United States and potential new China tariffs.

At the close, the Shanghai Composite index was up 0.01% at 3,154.55, and the blue-chip CSI300 index was up 0.05%. The smaller Shenzhen index ended down 0.71% and the start-up board ChiNext Composite index was weaker by 1.15%.

The Biden administration added 37 Chinese entities to a trade restriction list on Thursday, including some for allegedly supporting the spy balloon that flew over the United States last year, heightening tensions between Beijing and Washington.

US President Joe Biden is also set to announce new China tariffs as soon as next week targeting strategic sectors, and is expected to largely maintain existing levies, a source told Reuters.

Despite the drab performance on Friday, however, the benchmark CSI 300 was up 1.7% for the week, rising for a fourth week. The Hang Seng index added 2.6% for the week.

Nikkei boosted by local earnings

Meanwhile, Japan’s Nikkei share average rebounded on Friday, buoyed by positive earnings and Wall Street gains overnight, although profit-taking capped further advances.

The Nikkei closed 0.59% higher at 38,229.11, after rising more than 1% earlier in the session.

The benchmark index has seen a choppy week of trading after hitting a three-week high of 38,863.14 on Tuesday.

Higher expectations for US interest rate cuts following softer-than-expected jobs growth in April has brightened investor sentiment this week.

Thursday’s jobless claims numbers combined with solid local earnings gave the Nikkei the push needed to try higher again.

But the rally was reined in as investors jumped in to lock in profits with the index near the psychologically-significant 39,000 level.

“It does look to me like we’ve entered a period of consolidation,” Tony Sycamore, a market analyst at IG, said.

“But when you’re looking at the bigger picture, a period of consolidation is not a bad thing. It generally means the market’s rebuilding energy.”

Among individual shares, earnings reports largely decided the winners and losers of the morning session.

Gaming firms stood out, with Konami Group, up 9.3%, leading gains. Bandai Namco Holdings and Nintendo also advanced, up 6.3% and 3.5%, respectively.

Electrical equipment manufacturer Daikin Industries surged 9%.

Chip-related Screen Holdings fell to the bottom with a 10.9% decline. Shares of Panasonic Holdings were 5.5% lower after the energy unit of the firm missed its operating profit guidance for the business year.

Key figures

Tokyo – Nikkei 225 > UP 0.41% at 38,229.11 (close)

Hong Kong – Hang Seng Index > UP 2.25% at 18,963.68 (close)

Shanghai – Composite > UP 0.01% at 3,154.55 (close)

London – FTSE 100 > UP 0.77% at 8,445.47 (1304 GMT)

New York – Dow > UP 0.85% at 39,387.76 (Thursday close)

• Reuters, with additional editing by Vishakha Saxena

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Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]