Asian stocks held on to their gains this Friday after four weeks of losses, as Chinese markets gradually returned to positive territory after their holiday, encouraged by a pick-up in activity in the services sector.
The situation in the US also affected Asian stock market prices. The US Senate passed legislation to approve a temporary increase in the federal government’s debt limit, triggering a massive sell-off that saw benchmark US Treasury yields reach their highest since June.
Japan’s Nikkei index rose 1.8%, while MSCI, the broadest Asia-Pacific index outside Japan, was up 0.03%, but is forecast to gain 0.6% for the week, its best in a month.
The Asian benchmark was supported by advances in Chinese blue chips, which rose 1.07% as trading resumed after the week-long National Day holiday. The improvement in sentiment was partly due to a private sector survey which showed that service sector activity in China returned to growth during September.
Over the past three months, Chinese equities have been battered by regulatory changes, turmoil in the property sector including the near bankruptcy of Evergrande Group, and more recently, by a tightening of the government. Nevertheless, confidence is slowly returning and some investors are beginning to see buying opportunities in this situation.
Nevertheless, there is still a sense of uncertainty and concern. Bonds and shares issued by Chinese property companies collapsed on Friday, while there is still no sign of a resolution to China Evergrande Group‘s debt problems, which is affecting confidence in the wider sector.
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