Chinese Loan Prime Rate, Nasdaq, Oil

SINGAPORE – Asia-Pacific markets were mixed on Thursday as China cut key rates. Meanwhile, Wall Street fell, with the Nasdaq closing in correction territory and US yields retreating from their recent gains.

Mainland China markets rose, with the Shanghai composite close to the fixed line and the Shenzhen component up 0.35%. Hong Kong’s Hang Seng Index jumped 2.18%.

China cut its one-year prime lending rate by 10 basis points on Thursday, while its five-year LPR, which influences the pricing of home loans, was cut by 5 basis points, the first time since April 2020. .

Shares of Chinese property companies, which have been rattled by a debt crisis in the country, reacted. The Hang Seng Properties index jumped 1.84%, while Sunac jumped more than 10%, while Shimao also jumped more than 10% and Country Garden rose above 7%.

The rate cuts continue the PBOC’s efforts to lower borrowing costs, according to Capital Economics.

“Mortgages will now be slightly cheaper, which should help support housing demand. The PBOC has already pushed banks to increase the volume of mortgage loans,” Sheana Yue, China economist at the firm, said in a note after the announcement.

“Targeted support for home buyers appears to limit one of the most serious risks facing the economy,” Yue added.

Hong Kong tech stocks also surged, with the Hang Seng Tech index rising more than 3%. Tencent jumped 4.25%, Alibaba 4.35% and Meituan 6%.

Other Asia-Pacific Markets

Bond yields fall from highs

On Wall Street overnight, the Nasdaq Composite fell again on Wednesday, plunging 1.15% to 14,340.26. That took its decline from its November peak to more than 10% as investors continue to dump tech stocks as interest rates rise.

The Dow Jones Industrial Average fell 339.82 points to 35,028.65, led by a 3.1% decline in Caterpillar stock. The S&P 500 slid nearly 1% to 4,532.76.

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US bond yields fell slightly after climbing earlier this week, with the 10-year falling to 1.854% after hitting 1.9% earlier on Wednesday. The yield on 30-year Treasury notes fell 2 basis points to 2.167%. Yields move inversely to prices.

“It’s hard to get too excited about falling yields overnight, the economic backdrop still points to rising inflationary pressures and resilient growth, underscoring the need for the Fed as well as other central banks to move to tighter policy setting, so higher global rates in 2022 still look very likely,” Rodrigo Catril, senior FX strategist at National Australia Bank, wrote in a Thursday note.

Elsewhere, price concerns remained front and center as data showed the UK inflation rate hit a 30-year high in December, rising energy costs, a resurgence demand and supply chain issues continuing to drive up consumer prices.

Currencies and oil

Oil prices rose for a fourth day to hit a seven-year high overnight as a breakdown in a pipeline linking Iraq to Turkey heightened concerns. Brent crude climbed as high as $89.05, its highest since October 13, 2014, while US crude was 1.8% higher at $86.96 a barrel.

During Thursday’s Asian time, oil prices retreated. U.S. crude fell 0.47% to $86.55, while Brent fell 0.36% to $88.12.

In currencies, the US dollar index, which tracks the greenback against a basket of its peers, was at 95.617, slightly down from levels above 95.7 previously.

The Japanese yen was trading at 114.39 to the dollar, strengthening from levels above 114.5 previously. The Australian dollar was at $0.7216, falling from the $0.71 level.


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Felix J. Dixon