Global stocks follow Wall Street higher after bank rule change

Global stocks followed Wall Street higher after US financial regulators eased post-2008 crisis rules, which helped investors put to one side a resurgence in coronavirus cases.

In Asia-Pacific trading on Friday, Japan’s benchmark Topix, Australia’s S&P/ASX 200 and South Korea’s Kospi all climbed 0.7 per cent.

The exception in the region was Hong Kong, where the Hang Seng index fell 0.4 per cent after the US Senate unanimously passed a bill targeting officials who undermine the city’s semi-autonomous status. The legislation is in part a response to Beijing’s move to impose a controversial national security law on the former British colony.

China’s onshore market remained closed for a public holiday.

Overnight, Wall Street’s S&P 500 closed 1.1 per cent higher as financial stocks rallied after US regulators relaxed rules that prevent banks investing in or sponsoring hedge funds or private equity funds.

The prohibition was part of the Volcker rule, which banks have lobbied intensively to amend, and the change is expected to release up to $40bn in capital for lenders.

That development helped offset concerns over a surge in US coronavirus infections that prompted Texas to delay its economic reopening.

Futures markets pointed to a quiet start when Wall Street begins trading later in the day, with the S&P 500 tipped to open 0.1 per cent lower. The FTSE 100 was expected to climb 0.7 per cent.

The latest gains for Asian stocks reflect a broad rebound for the region after fears that a coronavirus resurgence could hit the reopening of economies prompted markets to fall at the start of the week.

The selling “seems to be much more from the retail [investor] side”, said Andy Maynard, a Hong Kong-based trader at China Renaissance, of the drop in the territory’s stocks. Mr Maynard added that the institutional investors that drive market moves showed few signs of piling out of the city’s stocks despite the latest political troubles.

Oil prices continued to rise after rallying on Thursday. Brent crude, the international benchmark, gained 1.2 per cent to $41.56 a barrel, while US marker West Texas Intermediate climbed 1.1 per cent to $39.15.