Bank relief and Alibaba plans nudge stocks higher

SINGAPORE: Asian stocks rose on Thursday with fears easing on the banking front and the prospect of a break-up at Chinese conglomerate Alibaba offering an encouraging sign that Beijing's regulatory storm focused on tech companies might finally be clearing.

MSCI's broadest index of Asia-Pacific shares outside Japan gained for a third day in a row, rising 0.3%. It is eyeing two consecutive quarters in the green for the first time since the middle of 2021. Japan's Nikkei eased 0.6% after jumping 1.3% on Tuesday. It is up 6.1% for the quarter, its best since March 2021. Australian stocks rose 1%.

Overnight Wall Street indexes jumped after the U.S. banks' top cop appeared before Congress and focused remarks on failures at Silicon Valley Bank and its supervision, rather than broader systemic issues across the financial sector. The U.S. dollar was firm, particularly against the safe-haven Japanese yen as investors wound back some of the safety positions built up in the last couple of weeks. The yen last traded at 132.75 to the dollar.

As the dust settles on a wild and volatile ride after Silicon Valley Bank's collapse unleashed fears of a broader banking crisis, the winners appear to be bonds and large tech companies that tend to benefit when interest rates fall. From the two-year tenor all the way to 30-year, U.S. yields are below the current Fed funds rate of roughly 4.8% as markets have dramatically repriced the rates outlook.

Two-year yields are down 30 basis points for the quarter, the first quarterly fall since March 2020. The rates-sensitive Nasdaq is heading for its best quarter in more than two years. Nasdaq and S&P 500 futures were steady on Thursday.

In Asia, investors extended a rally in Alibaba's Hong Kong shares as a conference call offered more details on the company's plan to spin off its businesses. The breakup will transform the conglomerate into a holding company, rather than an operational one, chief executive Daniel Zhang said on the call. Investors are hoping the plans signal authorities' tacit approval for growth and profit ahead.

"At least the conglomerate is calm and the regulatory uncertainty is calmed," said Redmond Wong, greater China market strategist at Saxo Markets in Hong Kong. "For the share price, this is quite big and this latest development can remove some of these concerns and improve on the valuation."

The stock, which hit above HK$300 in 2020, traded at HK$96.30 on Thursday. The broader Hang Seng rose 0.2%. Elsewhere in commodity trade, Brent oil futures steadied at $78.18 a barrel and gold, which has surged over the past few weeks, was under gentle pressure at $1,958 an ounce.

The euro dipped marginally to $1.0832.