Hang Seng Outperforms On Tech Giant Beats

A positive start for Chinese & Hong Kong equities provided the highlight of Asia-Pac dealing.

The space benefitted from hope re: fresh policymaker support for the Chinese economy, news of accelerated special bond issuance from local Chinese governments during May and stronger than expected quarterly earnings data from a couple of the tech giants (Alibaba & Baidu). This allowed the Hang Seng to outperform on the day (last +2.8%), although Chinese & Hong Kong equities have ticked away from best levels, perhaps on the back of the latest round of credit stress surrounding the Chinese property developer space.

• The move higher in Chinese & Hong Kong equities allowed e-minis to find a bit of a base after they took a hit in the wake of a BBG source report noted that “the US and Taiwan are planning to announce negotiations to deepen economic ties, people familiar with the matter said, in a fresh challenge to Beijing, which has cautioned Washington on its relationship with the island.” Note that losses were modest, even at their extremes, with the 3 major contracts last 0.1% softer on the session.
• Friday’s bid in Asia-Pac equities came on the back of a positive Wall St. lead, with Thursday seeing the U.S. indices benefit from a better than expected quarterly earnings report from Macy’s, among other retailers (bucking the recent trend of disappointing reports out of the sector), and speculation surrounding a Fed tightening pause at some point in Q4.