Chinese Stocks Stage Mild Friday Rebound as AI Shares Blunt Inflation Worries

China's stock market had a black Thursday but recovered a bit on Friday as global markets remained in the shadow of rising bond yields. However, tech-related shares continued to underpin trading.

The benchmark Shanghai Composite Index gained 0.87 percent on Friday following a slump of 2.04 percent on Thursday, wrapping up the week with a loss of 0.54 percent.

The Shenzhen Component Index eked out a weekly a gain of 0.23 percent, and the tech-focused ChiNext rose0.24 percent, despite of declines in both markets of more than 2 percent on Thursday. Hong Kong's Hang Seng Index lost 1.37 percent in the past five trading days.

"The Chinese market is more unlikely to show broad-based increases, but stocks of key industries, such as technology, will drive market performance – either up or down," said Xia Fanjie, an analyst with China Securities.

Meanwhile, global markets have been cautious amid concerns about the inflationary impact of the Iran war and the continuing stalemate in talks to end it. Inflationary concerns pushed bond yield higher in the week, boding increased borrowing costs for governments, companies and consumers. The yield on the 30-year US Treasury bond hit a 19-year high, though eased by the end of the week. Japanese yields remained near multi-year highs.

In Friday market trading, shares in China personal-computer giant Lenovo surged 20 percent after the company reported its best-ever year of earnings. Beijing-based chip maker Knowledge Atlas Technology, better known as Zhipu AI, soared 27 percent after the company released a new AI application programming interface that it says set a new global record for output speed. Mobile game giant NetEase jumped 6 percent after it beat expectations with a 3.6 percent rise in first-quarter profit to 10.7 billion yuan (US$1.6 billion).

Shares in Baidu, China's largest search engine, a robotaxi developer and a heavyweight in AI development, rose 1.3 percent after it said its AI businesses became the primary driver of revenue for the first time in the first quarter, despite a 2-percent dip in overall revenue to 32.1 billion yuan. Carmaker NIO slipped 0.4 percent after announcing it had narrowed its first-quarter loss to 496 million yuan on a doubling of revenue to 25.5 billion yuan.

Morgan Stanley said in a recent report that China's AI industry is moving from a phase of technology catch-up to realizing commercial value. The nation's self-sufficiency in semiconductors, a key government policy, could raise economic growth by about 3.5 points by 2035, the bank predicted.

Across Asia, Japan's Nikkei jumped 3.1 percent for the week after reporting a better-than-expected growth rate of 2.1 percent in the first quarter and lower-than-expected inflation for April. South Korea's Kopsi advanced 4.7 percent after last-minute negotiation between Samsung Electronics and union workers thwarted an 18-day strike that threatened to disrupt chip production amid a global shortage.

In Europe, the Stoxx600 index closed up 0.7 percent on Friday. Wall Street markets rose on Friday as Treasury yields eased and oil prices settled below intra-week highs. Global Brent crude futures closed the week in New York at US$103.54 a barrel. For the week, the S&P 500 advanced 0.9 percent and the Nasdaq added 0.5 percent.