GLOBAL MARKETS – Asia opens higher, but Chinese tech concerns weigh on Hong Kong

HONG KONG, July 6 (Reuters) – Most Asian stock markets opened fractionally higher on Tuesday ahead of a major decision by the Australian central bank on its quantitative easing program and despite ongoing concerns about future regulation of China’s powerful technology sector.

U.S. markets were closed on Monday to mark the Independence Day holiday, leaving the Asian region without a strong lead to start trading on Tuesday.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.05%.

In Hong Kong, the Hang Seng index fell 0.7%, while the CSI300 in China was nearly 0.3% lower.

Japan’s Nikkei rose 0.45% while the S&P ASX200 was 0.21% higher. In South Korea, the Kospi 200 Index rose 0.5% in early trading.

Chinese tech stocks remain under scrutiny on Tuesday after the Cyberspace Administration of China (CAC) ordered an investigation into Didi Global Holdings just days after it was listed on the New York Stock Exchange.

There is still uncertainty from Chinese tech companies and they are prominent in the Asian market, so that could cloud market sentiment, said Tai Hui, JPMorgan Assset Management chief Asia market strategist.

The technology sector is very important in Asia and we will not have much clarity in the coming weeks or even months about the regulatory adjustments in China and (that) will be a major driver for the market.

Investors’ appetites for Chinese tech companies could be tested by Xiaomi Corp. on Tuesday ordering 12 banks to lead a possible issuance of US dollar-denominated debt.

In Australia, the prospect of more mergers and acquisitions is under scrutiny from investors after a $16.7 billion bid for Sydney Airport Holdings Ltd from a pension fund consortium emerged on Monday.

According to Karen Jorritsma, head of equities at RBC Capital Markets in Sydney, sentiment appears to be almost past the (economic) reopening of trading and towards the outlook for corporate earnings coming in August.

Overall, the earnings confession season has been remarkably good, and with balance sheets in such great shape, the tide is turning towards M&A potential.

Investors around the world have been eagerly awaiting the release of the US Federal Reserve’s June Federal Open Markets Committee minutes on Wednesday as a guide to whether ongoing emergency stimulus measures can be phased out.

Major European markets were in positive territory overnight despite a jump in Brent crude oil prices above $77 a barrel, its highest level since October 2018.

The spike came after OPEC+ ministers called for talks on Monday following a clash last week when the United Arab Emirates rejected a proposed eight-month extension of production restrictions, meaning no agreement has been reached to increase production.

No date has been set for the next meeting of ministers from OPEC+ countries – the Organization of the Petroleum Exporting Countries (OPEC) and related producers, including Russia – but sources told Reuters that new talks could begin in the coming days.

Elevated oil prices raise concerns that higher global inflation could derail the post-corona pandemic recovery in some major global economies.

The Reserve Bank of Australia is expected to maintain its official target for the spot rate at 0.1%, but has announced that it will announce its decisions on the broader quantitative easing program expected to expire in September.

Economists predict that the RBA will limit its three-year interest rate target of 0.1% to the April-2024 bond, rather than extending it to the November-2024 bond.