Shares across Asia-Pacific edged higher after stocks rebounded on Wall Street, where reduced volatility eased pressure on hedge funds that had come under siege from retail traders.
Mainland China’s CSI 300 index of Shanghai- and Shenzhen-listed companies rose 0.8 per cent in early trading on Friday, while Hong Kong’s Hang Seng rose 1.1 per cent. Japan’s benchmark Topix was up 0.1 per cent and Australia’s S&P/ASX 200 added 0.5 per cent.
Overnight in the US, the S&P 500 index rose 1 per cent to recoup some of the 2.6 per cent fall it suffered on Wednesday’s session. The technology-focused Nasdaq Composite was up 0.5 per cent.
The gains on Wall Street came as Cboe’s Vix index, which measures implied volatility in the US market, fell back to 30 on Thursday after jumping to its highest level since November the day before.
This week’s rise in volatility has been spurred in part by a rapid rally in stocks targeted by Reddit users that has forced some hedge funds to exit their positions.
New York-listed games retailer GameStop has become the centre of a battle between day traders and hedge funds. Its stock ended Thursday’s session down 40 per cent after online brokerage Robinhood restricted retail trading in GameStop and other shares popular with smaller investors.
“The retail horde are not going anywhere, and may have no day jobs,” said Michael Every, a global strategist at Rabobank, an investment bank. “They have been defeated here, but can pile into any stock or asset they choose.”
Robinhood scrambled on Thursday to tap banks in order to shore up its capital and restore trading in GameStop shares, prompting the latter to rise more than 50 per cent in after-hours trading.
Futures for the S&P 500 fell 0.5 per cent during Asia trading, while those for London’s FTSE 100 were down 0.8 per cent.