Hang Seng Index Rises But Market Jitters Remain

Hong Kong stocks climbed almost 1 percent while other Asian markets were jittery on Friday as a volatile week marked by lingering worries over the China-US trade war and its impact on the world economy drew to a close.

The Hang Seng Index finished 238 points at 25,734, thanks largely to a strong showing by property plays.

New World Development surged more than 6 percent to close at HK$10.42 while Sun Hung Kai Properties put on 3.6 percent at HK$116.8.

Mainland stocks edged higher too, with the benchmark Shanghai Composite Index up 0.28 percent at 2,823 and the Shenzhen Component Index 0.57 percent higher at 9,060.

In Japan, the Nikkei Index edged up slightly. Taiwan gained 1 percent. But South Korea dropped 0.6 percent and Singapore was down 0.3 percent.

Fears of a global recession and a drawn-out trade spat between the world's top two economies saw the Dow suffer its worst one-day fall of the year on Wednesday.

Although US equities recovered slightly on Thursday, reassured by strong American retail sales and Walmart earnings, investors remained anxious, seeking out safe havens in the form of Treasury assets and gold, which continued to hover above the US$1,500 level.

The yield on the 10-year US Treasury bond slid on Wednesday below the yield on the two-year note, meaning the short-term interest rates were higher than the longer-term rates.

The so-called "inversion" phenomenon has been a reliable harbinger of recession for decades since it suggests that markets have a negative long-term outlook.

On Thursday, the yield on the 30-year bond hit an all-time low, while the 10-year note plunged to its lowest level in three years before staging a tepid recovery.

"Better-than-expected US data probably helped sentiment in US stock markets, though it seems to have been largely ignored by the bond market," said Stephen Innes, managing partner at VM Markets.

Economists have warned for months that trade tensions would drag down sentiment, which was already suffering due to China's economic slowdown and fears of Brexit's impact on Britain and Europe.

The tensions have already hit global demand, with data this week showing China's industrial output had plummeted to a 17-year low.

"There remains no end in sight" to the trade frictions, Tapas Strickland, senior analyst at National Australia Bank, said in a commentary.

"It is clear that China is willing to play the long game, meaning that to de-escalate tensions, any compromise will have to come from the US side," he said, citing an editorial from mainland tabloid The Global Times.

But with US rhetoric showing few signs of softening, investors are not holding their breath for a speedy resolution. (additional reporting by AFP)