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Asia tech shares jump; China property stocks rally on Evergrande payment

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October 22, 2021

By Kevin Buckland

TOKYO (Reuters) – Tech stocks climbed in Asia on Friday, following U.S. peers higher, while Chinese property stocks rallied following a surprise interest payment https://www.reuters.com/world/china/china-evergrande-sends-funds-trustee-bond-coupon-due-sept-23-source-2021-10-22 by debt-ridden property developer China Evergrande Group.

Meanwhile, energy stocks dragged following a pullback in oil prices overnight, and as coal futures extended losses after Beijing signalled it would intervene to cool surging prices that contributed to the country’s electricity shortage.

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More broadly, investors have become increasingly concerned that persistent inflation could force central bankers to tighten monetary policy at a point where global economic growth remains fragile.

Regional bond yields rose with those on U.S. Treasuries, where the market priced in higher inflation expectations by narrowing the spread between short- and long-term yields, and pushing breakeven rates to the highest since 2012.

The dollar held gains from overnight – when it rose the most since the start of last week against major peers – as better jobs data boosted the case for a faster tapering of Federal Reserve stimulus and earlier interest rate hikes.

Japan’s Nikkei advanced 0.3%, led by technology shares, while energy and basic materials shares were the biggest drags. The broader Topix ended the day 0.1% higher, with a 0.4% jump in the Topix growth index mostly negated by a 0.2% drop for the value index.

Chinese blue chips gained 0.7%, with the CSI300 Real Estate Index rising 2.1%. Hong Kong’s Hang Seng rose 0.1%, as an index tracking Hong Kong-listed mainland developers rallied 3.4%.

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China Evergrande Group wired funds to a trustee account on Thursday for a dollar bond interest payment due Sept. 23, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default. The stock jumped 3.5%.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up slightly, keeping it on track for a 1.6% gain this week. That would be a third straight winning week, the longest stretch since early June.

Futures pointed to a higher open in Europe, with FTSE futures indicating a 0.3% rise and DAX futures signaling a 0.3% advance.

By contrast, S&P 500 E-minis futures pointed to a 0.1% drop at the re-open, after the cash index posted a record closing high overnight, led by surging tech shares.

The S&P 500 added 0.3%, while the Nasdaq Composite rallied 0.6%, although the Dow Jones Industrial Average edged slightly lower.

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Next week, almost all the so-called FAANG giants report earnings: Facebook, Apple, Amazon, and Google-owner Alphabet. Netflix posted its results on Oct.19, and for the quarter that ended in September, diluted earnings-per-share came in at $3.19, beating analyst expectations of $2.57.

“The narrative over the last couple of days has been earnings focused and tech stocks have led the charge,” said Kyle Rodda, a market analyst at IG Australia.

“There’s momentum there, simple as that.”

At the other end, energy shares were the biggest drag on indexes from Tokyo and Sydney to Hong Kong and Shanghai.

Chinese coal prices continued to dive after the government said it would intervene to cool prices to help electricity producers out of a widespread power crunch.

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Oil prices also fell, with Brent set for its first losing week in seven, and West Texas Intermediate crude down for the first week in nine, following a retreat from multi-year highs reached earlier in the week.

Brent slid 0.7% to $84.03, while WTI dropped 0.6% to $82.03.

“The crude price and energy more broadly has had a pretty good run,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

“I don’t think people are giving up on energy necessarily, but I think people are thinking it’s time to switch out of what’s been a very hot sector.”

Meanwhile, yields on benchmark 10-year Treasury notes were at 1.6802%, easing back from a five-month high of 1.7050% reached overnight. Two-year yields at 0.4513% remained close to the overnight high of 0.4560%, a level not seen since March of last year.

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The dollar index, which gauges the greenback against six major rivals, edged higher to 93.755 on Friday, adding to the previous session’s 0.2% gain.

The index bounced off its lowest this month overnight after data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tighter labor market.

The Fed has signaled it could start to taper stimulus as soon as next month, with rate hikes following late next year. Full employment is among the Fed’s stated requirements for rates lift-off.

Fed Chair Jerome Powell speaks later on Friday in a panel discussion.

(Editing by Simon Cameron-Moore)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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