By Alun John

HONG KONG, (Reuters) – Chinese shares dragged on Asian stocks on Friday after they couldn’t latch onto a record-setting global rally following a week where central banks across the globe resisted any hawkish surprise in a dollar boost.

After the Bank of England failed to offer a possibility of raising interest rates on Thursday, the U.S. currency took strides in favor of sterling.

MSCI’s Asia-Pacific share index was lower than expected by 0.2%, while the overall MSCI Index fell 0.5%, although it had risen to a new month-high just one day earlier.

Hong Kong weighed heavily on the index regional, dropping 1.25%. It was influenced by index heavyweight HSBC. The rate-sensitive bank’s shares dropped nearly 5% due to the BoE’s dovish call and by property stocks.

The trading of shares of Chinese developer Kaisa Group Holdings Ltd in Hong Kong was also stopped. It happened one day after Kaisa Group Holdings Ltd said that a subsidiary hadn’t received a payment for a wealth management product. This is yet another sign of China’s growing liquidity crisis.

The index that tracks Hong Kong’s mainland Chinese developers fell 1.5% and spreads for high-yield Chinese debt were near records highs.

Shanghai shares fell by 0.2%, but Chinese blue chips rose 0.1%

Australia was however on track to record its highest week since mid-May and was 0.5% higher.

Global share markets were robust, with MSCI’s gauge of stocks around the globe hitting an all-time record on Thursday. In early Asia, it fell 0.1%.

The and Nasdaq both extended their record-breaking close streaks overnight to six sessions. [.N]

These gains were achieved even though Wednesday’s announcement by the U.S. Federal Reserve that it would start tapering its vast asset acquisition programme was finally made. However, Fed Chair Jerome Powell indicated that he is not in any hurry to raise borrowing costs.

Stefan Hofer (chief investment strategist at LGT Asia Pacific) stated that “Even though this did not happen as anticipated, it was a significant milestone. The direction of travel now is clearly towards policy normalisation though the Fed stressed that tapering has not been tightening.”

“It was excellent communication, and it was very professionally handled.”

Hofer indicated that U.S. job data will be a focus for the next months, as it would impact future Fed decisions. U.S. payroll data is expected to be available for October later this week.

The Bank of England’s surprise decision to delay an interest rate rise on Thursday was one of the biggest surprises of this week.

This sent the Pound plummeting 1.36% to Thursday. Bond yields fell in both Britain and Europe, with Germany’s 10-year Government bond yield falling 6 basis points to an all-time low of -0.23%.

Last October, the highs were at 94.353.

U.S. Treasury yields fell, and the U.S. yield-curve steepened overnight.

The benchmark U.S. 10-year yields fell to 1.509% on Thursday. However, they gained some ground and were last at 1.5367%.

After a report that Saudi Arabia’s crude oil production will soon exceed 10 million barrels per hour for the first-time since the beginning of the COVID-19 epidemic, oil prices recovered a bit from their month lows on Friday.

The price of a barrel rose by 1.03% to $79.62, and was higher at $81.18 per barrel. [O/R]

We added 0.17% because the declining yields gave support to this non-interest bearing asset.