Asian Stocks Up, Investors Digest Cut in Chinese Benchmark Lending Rate

  • Stock Market News
Asian Stocks Up, Investors Digest Cut in Chinese Benchmark Lending Rate
Credit: © Reuters.

By Gina Lee – Asia Pacific stocks were mostly up on Thursday morning after China’s central bank cut its benchmark lending rate.

Japan’s Nikkei 225 gained 0.57% by 10:06 PM ET (3:06 AM GMT). Trade data released earlier in the day showed that the trade balance was –JPY582.4 billion ($5.09 billion) and the adjusted trade balance was –JPY0.44 trillion in December. Exports grew 17.5% and imports grew 41.1%.

South Korea’s KOSPI inched up 0.07%.

In Australia, the ASX 200 edged down 0.19%. Data released earlier in the day showed that the employment change was 64,800, the full employment change was 41,500 and the unemployment rate was 4.2% in December.

Hong Kong’s Hang Seng Index jumped 1.80%.

China’s Shanghai Composite edged down 0.19% while the Shenzhen Component inched up 0.01%. The People’s Bank of China on Thursday cut the one-year loan prime rate (LPR) from 3.8% per cent to 3.7%, and the five-year LPR from 4.65% to 4.6%.

U.S. Treasury yields fell but remained higher for the week thanks to continually high inflation and expectations of U.S. Federal Reserve interest rate hikes as soon as March 2022.

“The market is now facing uncertainty regarding both rate hikes and the balance sheet,” Standard Chartered (OTC: SCBFF ) Bank global head of G-10 FX research Steven Englander said in a note.

“We therefore see scope for the recent volatility to continue near term,” the note added.

At a press conference marking his first year in office, U.S. President Joe Biden passed the responsibility of curbing high inflation to the Fed and supported the central bank’s asset tapering plans. He also signaled that his proposed $2 trillion economic agenda could be broken up.

Central banks in Indonesia, Malaysia, Norway, Turkey, and Ukraine will also hand down their policy decisions on Thursday.

At the press conference, Biden also indicated that he will not ease tariffs on China yet, and with Russia likely to “move in” on Ukraine, such a step would hurt Russian counterpart Vladimir Putin “badly.”

Meanwhile, company earnings were also on investors’ radars. U.S. companies including Morgan Stanley (NYSE: MS ), UnitedHealth Group Incorporated (NYSE: UNH ), and Procter & Gamble Co. (NYSE: PG ) released upbeat earnings but failed to lift investor sentiment. More earnings, including from Netflix Inc. (NASDAQ: NFLX ), are due for the rest of the week.

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