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Asia stocks fall as Alibaba sinks, oil at July low: markets wrap

Asia stocks fall as Alibaba sinks, oil at July low: markets wrap
The mascot for Alibaba Group's Taobao e-commerce platform near the company's headquarters in Hangzhou, China, on Wednesday, 10 November 2021. (Photo: Qilai Shen/Bloomberg)

Asia stocks fell on Friday, as Alibaba Group Holding Ltd. led Chinese companies lower after the e-commerce leader walked back plans to spin off and list its $11-billion cloud business.

Alibaba’s 10% slump, the biggest in a year, weighed on benchmarks of Hong Kong and the mainland after the company scuttled the planned spinoff. The broader MSCI Asia Pacific Index was down, but still on pace for a weekly gain of about 3%. Bonds climbed after data underscored a gradual deceleration in the US economy. Oil held declines after plummeting Thursday. 

Oil headed for a fourth weekly loss after sinking into a bear market as signs of healthy supplies and rising stockpiles offset attempts by OPEC+ leaders Saudi Arabia and Russia to keep declines in check. Crude steadied around $73 a barrel in Asia after Thursday’s slump was exacerbated by trend-following trades as key technical support levels failed. 

“Crude oil, which entered bear market territory overnight despite ongoing instability in the Middle East, provides a clear snapshot as to where the market sees the risk,” said Tony Sycamore, an analyst at IG Group in Sydney. “The pendulum of emotions, which not too long ago was elation around a possible soft landing, is now swinging toward recession and rate cuts.”

Alibaba sank the most since 30 January after scrapping a plan to carve out its cloud unit, citing US restrictions on the export of cutting-edge chips. Its core business of selling goods to domestic customers recorded lower-than-expected sales amid concerns over China’s sluggish economic recovery. The move comes amid the escalating fight between the US and China for technological dominance.

Treasury yields were steady after declining Thursday, as continuing applications for US unemployment benefits rose to the highest in almost two years. Australian and New Zealand bonds tracked the Treasury moves.

Fed Governor Lisa Cook said she is attuned to the risk of an unnecessarily sharp economic slump, pointing to strain in some sectors from tighter financial conditions. Fed Bank of Cleveland President Loretta Mester told CNBC she hasn’t decided whether another hike is still needed, adding officials have time to see how the economy is evolving. 

China told a handful of nationwide lenders to cap interest rates on interbank funding, people familiar with the directive said, a move that dovetailed with a sizable cash injection intended to calm the market after last month’s unexpected liquidity crunch.

Warren Buffett’s Berkshire Hathaway Inc. sold yen bonds at lower costs in its second Japan deal of the year as speculation mounts that the billionaire investor may put more money into the nation’s share market.

 US shares wavered on Thursday after a rally from “oversold” levels that was driven by bets the central bank is done with rate hikes — and turbocharged by short covering. The S&P 500 is still on pace for its best month in over a year. The recent gains resulted from investors realizing the Fed is likely finished with its rate-hiking campaign, according to James Demmert, chief investment officer at Main Street Research.

“Further short covering, along with institutional and retail investors being underweight stocks, will likely continue to drive the market higher into year-end,” he said. 

Read: Redemption for Active Managers Means Winning at the Worst Time

Meanwhile, money-market fund assets rose to an all-time high for the second straight week as interest rates north of 5% and volatility in fixed-income markets drove investors to havens.

Gold traded steady after climbing the most in a month in the previous session.

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