Asian stocks rally tracking Wall St strength, easing Fed fears

Investing.com-- Most Asian stocks rose sharply on Friday, encouraged by strength on Wall Street and increased bets that the Federal Reserve was done with its run of interest rate hikes, although focus still remained on key U.S. payrolls data due later in the day.

Technology-heavy indexes were the best performers for the day, tracking consensus-beating results from iPhone maker Apple Inc (NASDAQ:AAPL), while a further decline in Treasury yields also aided the sector. 

A drop in Treasury yields also saw Wall Street indexes close higher overnight, which in turn provided a strong lead-in to Asian markets. 

Asian tech rallies as yields dip, Apple suppliers surge 

Hong Kong’s Hang Seng index was the best performer among its peers, rallying 2% on strength in heavyweight tech stocks. 

South Korea’s KOSPI added 1%, while futures for India’s Nifty 50 index pointed to a slightly stronger open on strength in local tech heavyweights. 

Among individual stocks, Apple suppliers BYD (HK:1211), AAC Technologies (HK:2018) and Sunny Optical Tech (HK:2382) surged between 2.5% to 7% in Hong Kong trade, after the iPhone maker logged better-than-expected earnings for the September quarter, even as sales in China fell from increased competition. But this increased competition is expected to benefit Chinese suppliers of smartphone components.

South Korea's SK Hynix Inc (KS:000660), which supplies memory chips to Apple, rose 0.8%, while LG Display (KS:034220) and LG Chem Ltd (KS:051915) added 1.3% and 2.9%, respectively. 

Tech stocks benefited heavily from a drop in Treasury yields this week, after the Federal Reserve held interest rates as expected, but provided somewhat dovish signals on whether rates will rise further. 

This provided much relief to tech stocks, which had otherwise been battered by a spike in yields in the lead-up to the Fed meeting, which concluded on Wednesday. But markets are still set for one more major test, with U.S. nonfarm payrolls data for October due later in the day.  

Any signs of resilience in the labor market gives the Fed more impetus to hike interest rates. The central bank has still left the door open for one more hike this year, and is set to keep rates higher for longer. 

Among other Asian markets, Australia’s ASX 200 surged 1.1%, as data showed that retail sales unexpectedly grew in the third quarter. The strong retail sales reading sets up the Reserve Bank of Australia for a potential interest rate hike when it meets this coming Tuesday. 

Japanese markets were closed for a holiday.

Chinese stocks rally past weak services PMI 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose about 1% each, even as a private survey showed that Chinese service sector activity grew less than expected in October.

But the reading still improved slightly from September, amid some strength in foreign demand. 

While Chinese stocks saw some gains this week, a bulk of these gains were driven by bargain buying, given that other economic readings for October showed a surprise decline in manufacturing activity.