The major Asia Pacific stock indexes closed mostly higher on Friday with shares in Hong Kong bucking the trend. Investors primarily followed the lead set by Wall Street on Thursday.
U.S. shares traded sideways to lower throughout the session before surging during the last hour of trading. Earlier gains were capped by concerns over the spread of COVID-19 in the U.S., but late in the session prices rose on the back of bank stocks after U.S. banking regulators rolled back post-crisis restrictions to allow banks to increase investments in certain funds and vehicles.
On Friday, Japan’s Nikkei 225 Index settled at 22512.08, up 252.29 or 1.13%. Hong Kong’s Hang Seng Index finished at 24549.99, down 231.59 or -0.93% and South Korea’s KOSPI Index closed at 2134.65, up 22.28 or +1.05%.
China’s Shanghai Index settled at 2979.55, up 8.93 or +0.30% and Australia’s S&P/ASX 200 Index finished at 5904.10, up 86.40 or +1.49%.
Banks Rally on Banking Regulation Rollback
The Office of the Comptroller of the Currency on Thursday approved changes to the so-called Volcker Rule, which prevented banks from investing their own money in hedge funds and private equity funds. The regulators also scrapped a requirement that lenders set aside cash for derivatives trades between different affiliates of the same firm.
Fed Places New Restrictions on Banking Industry
The U.S. Federal Reserve on Thursday placed new restrictions on the banking industry after its annual stress test found that several banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic. As a result, banks have to suspend share buyback programs and leave dividend payments at current levels for the third quarter.
Australia’s Quantas Airways Shares Plummet Over 9%
In corporate news, shares of Australian airlines Qantas Airways plummeted 9.07% after the firm announced it had completed a share placement to institutional investors worth approximately 1.36 billion Australian Dollars ($936.83 million).
On Thursday, the firm had announced plans to reduce its pre-crisis workforce by at least 6,000 roles as part of steps to recover from the coronavirus pandemic.
Hong Kong Shares Slide as Pandemic, US Sanction Pressures Weigh
Hong Kong shares ended lower on Friday, after U.S. lawmakers moved closer to sanctioning people and companies they consider China’s accomplices in curbing the city’s autonomy, while new coronavirus outbreaks globally also soured the sentiment.
Investors turned cautious as Chinese authorities could pass that security law during a June 28-30 meeting, amid mixed signals in global markets, CHIEF Securities said in a note.
Financial markets in mainland China were shut for the Dragon Boat Festival, while Hong Kong markets were closed for it on Thursday, when global equities slipped on worries of further coronavirus outbreaks across the world.
The U.S. Senate passed a legislation on Thursday that would sanction people or companies it deems in support of China’s attempt to restrict Hong Kong’s autonomy, pushing back against Beijing’s new security law for the city.
U.S. Imposes Visa Restrictions on Chinese Officials Over Hong Kong Autonomy
U.S. Secretary of State Mike Pompeo said on Friday the United States was imposing visa restrictions on Chinese Communist Party officials believed responsible for restricting freedoms in Hong Kong.
“Today, I am announcing visa restrictions on current and former CCP officials who are believed to be responsible for, or complicit in, undermining Hong Kong’s high degree of autonomy,” Pompeo said in a statement, which did not name those targeted.
For a look at all of today’s economic events, check out our economic calendar.