Asia report: Markets mixed as China trims 14-day repo rate

Asia-Pacific markets finished in a mixed state on Monday as investors navigated the implications of the US Federal Reserve’s recent outsized rate cut, with policy decisions from regional central banks, including Japan and Australia, also in focus this week.

Patrick Munnelly at TickMill said Asian stocks rose amid expectations that China would implement additional measures to stimulate the world's second-largest economy, subsequent to the start of the US Fed’s easing cycle.

“China announced that it was preparing for a rare economic briefing by three senior financial regulators,” he noted.

“This announcement coincided with the reduction of one of its short-term policy rates, which has fuelled speculation that new stimulus is imminent.

“Markets are anticipating the implementation of additional stimulus measures to revitalise the global economy and revive China's GDP.”

Munnelly said the “bleak picture” was further exacerbated by a slew of Chinese data on Friday.

“The MSCI Asia Pacific Index increased in response to the uptick in equities in South Korea, Hong Kong, and China.

“After BoJ Governor Ueda stated on Friday that officials were not in a rush to raise interest rates again, the Yen experienced a decline.

“The dollar index remained relatively unchanged as Australian bonds declined in anticipation of the central bank's anticipated extension of a policy halt on Tuesday,” Munnelly said, adding that housing costs remained the primary driver of persistent inflation in the country.

Regional markets start the week in mixed state

In China, the Shanghai Composite rose 0.44% to 2,748.92, while the Shenzhen Component edged up 0.1% to 8,083.38.

Stocks of Jilin Yatai Group, Guangdong Rongtai Industry, and Fujian Furi Electronics surged over 10% in Shanghai.

However, Hong Kong’s Hang Seng Index slightly declined by 0.06% to 18,247.11, with major stocks like WuXi Biologics and Zhongsheng Group falling more than 4%.

South Korea’s Kospi 100 increased by 0.38% to 2,606.27, supported by significant gains in EcoPro Materials and SK Square.

In contrast, Australia’s S&P/ASX 200 dropped by 0.69% to 8,152.90 as shares of Webjet and Contact Energy fell sharply.

Similarly, New Zealand’s S&P/NZX 50 decreased by 0.6% to 12,404.17, with notable declines in Synlait Milk and Ryman Healthcare.

Currency markets saw modest movements, with the dollar last down 0.17% on the yen to trade at JPY 143.61.

The greenback was also 0.17% weaker against the Aussie at AUD 1.4666, while it retreated 0.13% from the Kiwi, changing hands at NZD 1.6010.

On the oil front, Brent crude futures were last up 0.23% on ICE at $74.66, while the NYMEX quote for West Texas Intermediate was 0.3% firmer at $71.21.

Japan’s markets remained closed on Monday for the Autumnal Equinox holiday.

PBoC injects cash into economy, lowers 14-day repo rate

In economic news, China's central bank injected CNY 234.6bn into the banking system through open market operations on Monday, aiming to ensure adequate liquidity as the quarter ended.

The central bank also reduced the 14-day reverse repo rate from 1.95% to 1.85%, a move intended to support economic stability amid ongoing challenges.

In Australia, the Reserve Bank of Australia (RBA) commenced its two-day policy meeting, with a key decision on the nation's monetary policy expected on Tuesday.

Analysts largely anticipated that the RBA would maintain the benchmark interest rate at 4.35%.

The focus remained on whether the central bank would shift from its traditionally hawkish approach, especially in light of the US Federal Reserve’s significant 50-basis-point rate cut last week, signalling the start of an easing cycle.

Elsewhere, Singapore reported higher-than-expected inflation figures for August, with headline consumer price index (CPI) increasing 2.2% year-on-year and core CPI rising by 2.7%.

The headline CPI surpassed Reuters' forecast of 2.15% but was slightly lower than the previous month's 2.4%.

Similarly, the core CPI, which excludes accommodation and private transport costs, exceeded expectations at 2.7%, up from 2.5% in July and above the projected 2.6%.

Reporting by Josh White for Sharecast.com.