Asia report: Markets mixed as China trims loan prime rates
Markets in Asia finished mixed on Thursday, with stocks in mainland China surging as the country’s central bank cut its loan prime rate, in a bid to contain the economic impact of the ongoing coronavirus outbreak.
In Japan, the Nikkei 225 was up 0.34% at 23,479.15, as the yen weakened 0.66% against the dollar to last trade at JPY 112.11.
Of the major components on the benchmark index, fashion firm Fast Retailing was down 0.58%, while automation specialist Fanuc rose 0.56% and technology conglomerate SoftBank Group rocketed 3.36% higher.
The broader Topix index managed gains of 0.16% by the end of trading in Tokyo, closing its session at 1,674.48.
On the mainland, the Shanghai Composite rose 1.84% to 3,030.15, and the smaller, technology-soaked Shenzhen Composite rocketed 2.15% to end the day at 1,886.14.
During the day, the People’s Bank of China cut its one-year loan prime rate by 10 basis points to 4.05%, while the five-year rate had five basis points trimmed from it to 4.75%.
Investors had been broadly anticipating such a move, which came days after the central bank reduced its medium-term lending rates.
“The belief that central banks and governments can offset any economic downside from the virus with monetary and fiscal stimulus has continued to help drive asset prices higher, with Asia markets also rising this morning as China announced another reduction in its loan prime rate, in a move that wasn’t unexpected,” said CMC Markets analyst Michael Hewson.
South Korea’s Kospi was down 0.67% at 2,195.50, while the Hang Seng Index in Hong Kong slipped 0.17% to 27,609.16.
The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 0.33%, while chipmaker SK Hynix added 0.48%.
Oil prices were mixed at the end of the Asian day, with Brent crude last down 0.15% at $59.03 per barrel, while West Texas Intermediate rose 0.28% to $53.64.
In Australia, the S&P/ASX 200 was up 0.25% at 7,162.50, as fresh data showed a rise in unemployment in the sunburnt country.
According to the Australian Bureau of Statistics, unemployment stood at 5.3% on a seasonally-adjusted basis in January, up from the 5.1% it reported in September.
“While the fall in the unemployment rate to 5.1% in December gave the [Reserve Bank] the signal that another interest rate cut was not necessary at its February meeting, today’s data confuses the interest rate debate, because the RBA’s latest forecasts assume the unemployment rate will average 5.2% for now,” noted AMP Capital senior economist Diana Mousina.
She added that the higher-than-expected rise in unemployment was unlikely to lead the central bank to cut rates in March, although the chance of such a cut happening was still high at between 40% and 50%.
In equities down under, flag carrier Qantas ascended 5.87% after it announced changes to its capacity in the Asian market through to late May, amid what it called the “unfolding and … uncertain” coronavirus outbreak.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 added 0.7% to break through 12,000 points and reach a new record close of 12,064.86.
It was led higher by software firm Ebos, which was up 3.4%, and airport operator AIAL which added 3%, after both companies reported decent first-half earnings growth.
Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.8% at AUD 1.5095, and the Kiwi retreating 0.82% to NZD 1.5787.