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Asian Stocks Down, Investors Digest Disappointing U.S. GDP, Earnings

Published 10/28/2021, 10:16 PM
Updated 10/28/2021, 10:30 PM
© Reuters.

By Gina Lee – Asia Pacific stocks were mostly down on Friday morning as investors continued to digest the latest, disappointing U.S. GDP. Disappointing earnings, as well as bond-market gyrations over continued inflation and monetary tightening concerns, also contributed to the end-of-week and month downward trend.

Japan’s Nikkei 225 inched down 0.01% by 10:15 PM ET (2:15 AM GMT) and South Korea’s KOSPI was down 0.55%.

In Australia, the ASX 200 fell 0.62% and Hong Kong’s Hang Seng Index was down 0.58%

China’s Shanghai Composite edged down 0.18% while the Shrenzhen Component edged up 0.13%. China Evergrande Group's (HK:3333) debt woes remain in the spotlight, with payment for a dollar-denominated bond due on Friday. China will also release data, including the manufacturing and non-manufacturing purchasing managers indexes (PMI) as well as the Caixin manufacturing and service PMIs, in the following week.

In the U.S., data released on Thursday showed that the GDP grew a smaller-than-expected 2% quarter-on-quarter, while the GDP price index grew 5.7% quarter-on-quarter, in the third quarter of 2021. Separately, 281,000 initial jobless claims were filed throughout the week.

Disappointing results from Apple Inc. (NASDAQ:AAPL) and Inc. (NASDAQ:AMZN) also set the stage for a more than $200 billion drop in combined market value when U.S. markets open on Friday.

The benchmark U.S. 10-year Treasury yield fell, with the curve between 20- and 30-years inverted for the first time since the U.S. government reintroduced a two-decade maturity in 2020. In Asia Pacific, Australian debt was under pressure after the Reserve Bank of Australia opted not to defend its 0.1% yield target.

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In Europe, the European Central Bank handed down its policy decision on Thursday and renewed a pledge to conduct emergency bond-buying at a “moderately” slower pace.

Although a generally positive earnings season has helped underspin global shares, inflation risks from supply-chain bottlenecks and costlier raw materials have increased expectations of interest rate hikes.

“If we’re going on the right path, but at a slower pace, which means the policy support persists for longer,” then that’s “still positive for markets,” State Street’s head of North America multi-asset strategy Lee Ferridge told Bloomberg.

Meanwhile, G20 joint finance and health ministers will meet later in the day, with a leaders’ summit to take place over the weekend.

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