A slump in Alibaba's share price caused a stir on Asia's stock exchanges and a sobering end to the week. In New York, disappointing company results on Thursday dampened the mood. Investors also received mixed signals from the US economy. While short-term labour market data pointed to a slowdown, an industrial barometer signalled improved sentiment in the US manufacturing sector.
The downward slide continued in Hong Kong on Friday, driven primarily by a slide in Alibaba's share price. The shares of the Chinese e-commerce giant fell by 10% and dragged the Hang Seng Index down by 2%. The background to this was the announcement that Alibaba would not carry out the complete spin-off of its cloud group due to US chip export restrictions. The technology-orientated Hang Seng Tech Index fell by around 1.7%. Overall, stock market sentiment in the Asia-Pacific region remained depressed at the end of the week. The CSI 300 index closed around 0.5% lower. In Tokyo, the Nikkei 225 traded around 0.5% higher. In South Korea, the Kospi fell by 0.8% and the Kosdaq fell by 1.5%.
Shares on Wall Street took a breather after disappointing quarterly results and forecasts from Walmart and Cisco halted the recent price rally. The Dow Jones Industrial closed 0.13% lower at 34,945.47 points. Over the course of the week, milder inflation data had bolstered hopes of an imminent interest rate turnaround in the USA. The S&P 500 fell by 0.12% on Thursday and ended trading at 4,508.24 points. On the Nasdaq, the indices remained more or less unchanged from the previous day. Walmart shares lost around 8% yesterday. Although the world's largest retailer raised its annual targets, it remained below market projections. The shares of network equipment provider Cisco also came under pressure, losing around 10% following a sales warning. On the bond market, the yield on ten-year US government bonds trended sideways at around 4.45%.
Meanwhile, the short-term situation on the US labour market has deteriorated slightly. The number of initial jobless claims rose more sharply than expected last week by 13,000 to 231,000. Furthermore, industrial production in the US fell significantly in October against the backdrop of strikes at the major car manufacturers. Production fell by 0.6% month-on-month, whereas economists had expected a decline of 0.4%. Without the effect of the strikes, however, an increase of 0.1% would have been registered. On the other hand, the business climate in the Philadelphia region improved slightly, as reported by the local central bank. The Philly Fed Industrial Index rose from minus 9.0 to minus 5.9 points in November (consensus -8.0). A value above zero points signals an increase in economic activity.
In San Francisco, following a personal meeting with US President Joe Biden, Chinese leader Xi Jinping warned of the consequences of a geopolitical showdown between the two powers. "China is willing to be a partner and friend of the United States, but the US should not regard China as a geopolitical challenge, otherwise this could lead to wrong political decisions, misguided actions and undesirable results."
Corporate news in focus: Generali Q3 figures and Volkswagen Group October deliveries.
Economic data in focus: UK Retail Sales October (08:00), Austria Consumer Prices October (09:00), Eurozone Current Account September (10:00) and Consumer Price Index October (11:00), USA Housing Starts and Permits October (14:30).
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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.