Asia report: Markets mixed as PBoC keeps rates steady

Asia-Pacific markets closed in a mixed state on Monday, following a significant sell-off on Friday, with investors closely eyeing fresh data releases from key economies including China, Japan, and South Korea throughout the week.

China’s central bank kept its loan prime rates on hold in its latest decision on Monday, aligning with market expectations.

“Equity markets in the Asia mostly traded higher as tensions in the Middle East remained stable, allowing attention to shift back to corporate earnings and economic fundamentals,” said TickMill market analyst Patrick Munnelly.

“Oil and gold prices continued to ease, signalling a relief rally in the markets.

“Bank of Japan Governor Ueda suggested over the weekend that loose monetary policy would persist due to soft underlying inflation.”

Munnelly said concerns over escalating tensions in the Middle East were continuing to affect financial markets, potentially delaying interest rate cuts by central banks.

“In the US, recent positive economic data, including stronger-than-expected retail sales, prompted some Federal Reserve policymakers to reconsider the timing of rate cuts, diminishing expectations of cuts in June or July.

“Now, markets anticipate only one 25 basis point rate cut by the end of the year.”

Markets trade mixed after Friday’s global sell-off

In Japan, both the Nikkei 225 and the Topix index saw gains, rising by 1% and 1.38% respectively.

Notable performers included Sumitomo Dainippon Pharma, Nexon Co, and Yamaha Corporation, which saw increases of 6.68%, 5.7%, and 5.49% respectively.

Conversely, Chinese markets experienced a slight downturn, with the Shanghai Composite and Shenzhen Component slipping by 0.67% and 0.43% respectively.

Companies such as Beijing Tricolor Technology and Dali Pharmaceutical Co faced notable declines in Shanghai, of 10% and 9.65% respectively.

Hong Kong's Hang Seng Index, however, surged by 1.77%, with notable gains from Sino Biopharmaceutical, Sinopharm Group, and Meituan, which rose by a respective 8.55%, 5.63%, and 5.56%.

South Korea's Kospi index also recorded positive movement, climbing by 1.45%, with notable performers including Posco Future M and EcoPro Materials, which experienced increases of 9.27% and 9.14%.

In Australia, the S&P/ASX 200 index rose by 1.08%, with South32 and Seek leading the gains, up by 5.64% and 5.35%.

New Zealand's S&P/NZX 50 index saw a more modest increase of 0.48%, with notable gains from Restaurant Brands New Zealand and Heartland Group Holdings, up by 3.24% and 2.91%.

In currency markets, the dollar was last up 0.04% on the yen, trading at JPY 154.70.

The greenback weakened against both its Australian and New Zealand counterparts, however, slipping 0.23% against the former to AUD 1.5544, and 0.34% on the latter to change hands at NZD 1.6925.

Oil prices meanwhile declined, with Brent crude futures last down 1.34% on ICE at $86.12 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.2% to $82.14.

People’s Bank of China keeps loan prime rates steady

In economic news, China's central bank opted to keep its one- and five-year loan prime rates (LPR) steady, maintaining them at 3.45% and 3.95% respectively.

The one-year LPR is a crucial benchmark for the majority of household and corporate loans, while the five-year LPR serves as a pivotal indicator for most property mortgages.

Beijing’s move to maintain the rates aligned with the expectations outlined in a Reuters poll, which had anticipated no changes to either rate.

Reporting by Josh White for Sharecast.com.