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James Hyerczyk
Asia Pacific Shares

The major Asia-Pacific stock indexes are expected to open Monday’s session flat with the early price action a response to the mixed performance on Wall Street and the plunge in crude oil prices. Concerns over a weakening U.S. labor market will be another price driver as well as global vaccination progress. Traders will also be watching for a rotation out of high-flying technical stocks into cyclical shares.

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 30017.92, down 218.17 or -0.72%. In Hong Kong, the Hang Seng Index finished at 30644.73, up 49.46 or +0.16% and in South Korea, the KOSPI Index closed at 3107.62,

In China, the Shanghai Index settled at 3696.17, up 20.81 or +0.57% and in Australia, the S&P/ASX 200 finished at 6793.80.

Traders will be watching global oil prices early Monday after oil prices fell for a second session on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages. Rising global bond yields will also be eyed by investors as a reason to trim aggressively long positions.

Last Week’s Recap

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Hong Kong Stocks Post Third Weekly Gain on Economic Recovery Bets

Hong Kong shares ended higher on Friday to deliver the third weekly gain, underpinned by material stocks, as investors cheered data from major economies pointing to a global economic recovery from the COVID-19 pandemic fallout.

Leading the gains on Friday, the Hang Seng Materials Index climbed 3.1%, having climbed 15.5% in its best week since April 2015. Telecommunications firms also advanced with an 11% jump for the week.

China’s Blue-Chip Index Ends Week Lower on Policy Tightening Worries

China’s blue-chip index recouped earlier losses to end higher on Friday, helped by gains in infrastructure and securities stocks, though it posted weekly losses on investor concerns over policy tightening and lofty valuations.

Leading the gains for the day, the CSI300 Infrastructure Index jumped 2.9%, while the CSI SWS Securities Index climbed 2.7%. Among sectors with high valuations, the CSI 300 Consumer Staples Index retreated 2.6%, snapping a four-week gain, while the CSI300 Healthcare Index slumped 4.3%.

The big fear for investors is that the People’s Bank of China (PBOC) would start to drain liquidity sooner than the U.S. Fed, while there are already expectations of a rise in the domestic interest rate. Jin Jing, an analyst with Caitong Securities warned, “Investors could start to rebalance their allocations, shifting out of expensive stocks towards cyclical players with low valuations that would benefit from an economic recovery.”

Australia Shares Track Asian Peers Lower, Commodity Stocks Weigh

Australian shares has their worst session in three weeks on Friday, tracking losses in Asian peers, as a worse-than-expected rise in weekly U.S. jobless claims tempered hopes for a quick economic recovery.

Energy stocks saw their worst session in 4-1/2 months, slumping 3.6% as oil prices dropped. Minters had their worst day in three weeks as gold prices sank to a seven-month low as rising U.S. Treasury yields eroded the bullion’s appeal as an investment.

Nikkei Slips on Profit-Taking, Logs Weekly Gain

Japan’s Nikkei share average slipped on Friday as profit-taking ahead of the weekend trumped optimism over a broad economic recovery, though the index gains for a third week.

For a look at all of today’s economic events, check out our economic calendar.
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