Asia report: Stocks gain on last day of disastrous month

Stocks were higher across the board in Asia on Friday, with Chinese bourses enjoying a particularly strong session, as investors pinned their hopes on more economic support being announced by Beijing.

In Japan, the Nikkei 225 was up 1.75% at 26,847.90, as the yen strengthened 0.74% on the dollar to last trade at JPY 129.88.

Fashion firm Fast Retailing was down 1.34%, while among the benchmark’s other major components, automation specialist Fanuc added 3.28% and technology conglomerate SoftBank Group was 1.68% firmer.

The broader Topix index advanced 2.09% by the end of trading in Tokyo, closing at 1,899.62.

On the mainland, the Shanghai Composite jumped 2.41% to 3,047.06, while the smaller, technology-heavy Shenzhen Composite surged 3.89% to 1,878.88.

The strength in Chinese equities came on the back of media reports in the People’s Republic on Friday, suggesting politburo officials had agreed more support at a recent meeting to help the country meet its 2022 growth targets.

China’s economy has been a major concern for investors in recent weeks as the country battles its worst Covid-19 outbreak since the start of the pandemic in early 2020.

Its largest city Shanghai has been under lockdown restrictions for around one month, while fears are growing that the capital Beijing could be heading for a similar fate as mass testing there continues to expand.

The lengthy lockdown and other social and economic restrictions have seen Beijing’s ‘zero-Covid’ strategy come under heavy criticism, given the currently-dominant variants of the coronavirus, such as Omicron, are widely considered much more difficult to contain.

South Korea’s Kospi added 1.03% to 2,695.05, while the Hang Seng Index in Hong Kong surged 4.01% to 21,089.39.

Technology shares were among the leading gainers in the special administrative region, with Alibaba Group powering 15.69% higher and Tencent Holdings ahead 11.07%, as the Hang Seng Tech Index advanced 9.96%.

The gains for tech plays came on the back of a solid session on Wall Street overnight, where investors shrugged off a fall in US GDP and instead focussed on earnings, seeing the Nasdaq Composite tack on 3.06%.

Seoul’s blue-chip technology stocks joined the party as well, with Samsung Electronics jumping 4.01% and SK Hynix ahead 2.74%.

“Asia markets are on track for their worst month since March 2020 amid concerns about what Beijing’s zero tolerance to covid policy could mean for the outlook for China’s economy,” said Victoria Scholar, head of investment at Interactive Investor.

“There is also nervousness about the shift towards monetary policy tightening from the Fed and the accompanying stronger dollar.

“Stocks in Shanghai are on track for their worst month since January 2016.”

Scholar said that in the US, even after Thursday’s sharp gain partly thanks to Facebook parent Meta Platforms, the Nasdaq was set for its sharpest one-month slide since March 2020 at the height of the pandemic.

“[Markets are] spooked by the prospect of faster tightening from the Fed, spiralling inflation, and a possible recession stateside after yesterday’s data confirmed a contraction in the US economy in the first quarter.”

Oil prices were higher as the region entered the weekend, with Brent crude futures last up 0.98% on ICE at $108.64 per barrel, and West Texas Intermediate advancing 0.59% on NYMEX to $105.98.

In Australia, the S&P/ASX 200 was 1.06% higher at 7,435.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.07% to 11,884.30.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.82% at AUD 1.3974, and the Kiwi advancing 0.6% to NZD 1.5319.