Real Estate Stocks Saw Gains on the Day

Stocks in Asia-Pacific were mixed on November 11, after data released one day earlier showed U.S. consumer inflation spiked in October.

Shares of a real estate developer China Evergrande Group listed in Hong Kong jumped 5.49%. A report from Chinese media outlet Cailianshe that several bondholders received coupon payments from the company helped to boost Evergrande’s shares. 

Other real estate stocks in Hong Kong also saw gains on the day. China Vanke gained 3.76% and Country Garden added 2.21%. The Hang Seng Properties index advanced 1.68%.

Nonetheless, Hong Kong’s broader Hang Seng index dropped 0.15%.

On the contrary, mainland Chinese stocks demonstrated their strength on November 11. The Shanghai Composite gained 0.59% and the Shenzhen component added 0.859%. 

In Japan, the Nikkei 225 advanced 0.5% while the Topix index gained 0.27%. South Korea’s Kospi fell 0.68%.

In Australia, the S&P/ASX 200 dropped 0.63%.

U.S. stocks and inflation

On November 10, stocks retreated after October’s consumer price reading showed the biggest annual jump in more than 30 years, triggering a spike in bond yields. 

The yield on the benchmark 10-year Treasury rose by about 11 basis points on November 10 after the CPI reading. As Treasury yields jumped, investors got rid of high-flying technology stocks and bid up bank stocks. Investors also sought refuge in gold as well as Bitcoin.

The Dow Jones Industrial Average dropped 240.04 points, or about 0.7% to close at 36,079.94. The S&P 500 declined 0.8% to 4,646.71. The Nasdaq Composite fell nearly 1.7% to 15,622.71. 

The consumer price index (CPI) jumped 6.2% from a year ago, well above the 5.9% estimate from economists surveyed by Dow Jones. In regards to a monthly basis, the consumer price index increased 0.9% against the 0.6% estimate. The CPI represents a basket of products ranging from gasoline to rents and groceries.

Moreover, technology shares were under pressure on November 10 as rising rates diminish the value of future earnings. They can hit growth stocks particularly hard. Nvidia dropped 3.9%, Alphabet fell 2%, and Advanced Micro Devices pulled back about 6.1%.

In the meantime, bank stocks got a lift from the jump in bond yields, capping losses for the overall market. As a reminder, higher rates mean banks charge greater interest on loans, which typically boosts profits. Bank of America added nearly 0.8% and Well Fargo gained 0.9%. 

Aside from stocks and bonds, investors are looking at gold and Bitcoin. Their prices rose as investors sought assets that could hold up better as prices rise.

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