Asia report: Stocks rise as China keeps lending rates on hold

In Japan, the Nikkei 225 jumped 2.67% to 27,680.26, as the yen strengthened 0.02% on the dollar to last trade at JPY 138.16.

Automation specialist Fanuc was up 2.94%, fashion firm Fast Retailing added 2.59%, and technology conglomerate SoftBank Group was 2.4% firmer.

Toyota Motor gained 0.78%, even after its said its August production would total about 700,000 vehicles, down from its previously-flagged 850,000 figure.

It cited a shortage of parts as behind the decline, as a result of Covid-19-related disruptions.

The broader Topix index was ahead 2.29% by the end of trading in Tokyo, closing at 1,946.44.

On the mainland, the Shanghai Composite was 0.77% firmer at 3,304.72, and the technology-heavy Shenzhen Component was 0.63% higher at 12,573.12.

The People’s Bank of China stood pat on its key lending rates in its latest decision during the day, with the one-year loan prime rate at 3.7%, and the five-year rate at 4.45%.

“The loan prime rates - set by a panel of banks, with some nudging from the PBoC - were left on hold, in line with the earlier medium-term lending facility (MLF) rate decision by the PBoC,” said Pantheon Macroeconomics chief China economist Craig Botham.

“The central bank appears broadly content with liquidity conditions at present, and has also scaled back its daily liquidity operations, draining liquidity so far in July, after a modest surge at the end of the second quarter.

“Liquidity is deemed ample, and rates are not the obstacle to credit growth, so we expect this state of affairs to continue, at least until the new wave of local government bond issuance begins, likely later this quarter, which should prompt another small reserve requirement ratio (RRR) cut.”

South Korea’s Kospi was ahead 0.67% to 2,386.85, while the Hang Seng Index in Hong Kong added 1.11% to 20,890.22.

Chinese technology plays once again led the gains in the special administrative region, as the Hang Seng Tech Index popped 2.16%.

Alibaba Group was up 2.28%, Meituan jumped 2.96%, NetEase surged 3.75%, and Tencent Holdings was ahead 1.62%.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 0.66%, while SK Hynix was 2% higher.

Oil prices were lower at the end of the Asian day, with Brent crude futures last down 1.44% on ICE at $105.80 per barrel, and West Texas Intermediate falling 1.49% to $102.67 on NYMEX.

In Australia, the S&P/ASX 200 rose 1.65% to 6,759.20, after the head of the country’s central bank warned of higher inflation to come.

Reserve Bank of Australia governor Philip Lowe said inflation figures for the June quarter, set to be released next week, would show price rises accelerating further from the 5.1% rate reported for the three months to March.

In his speech, Lowe said there needed to be a clear plan back to the RBA’s 2% to 3% inflation target, adding that the bank’s nominal neutral cash rate was 2.5% - a decent step up from its current 2.35% benchmark rate.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.33% to 11,199.01, led higher by cancer testing provider Pacific Edge, which leapt 4.2%.

The company said it processed more than 7,000 tests in the June quarter - up 13% quarter-on-quarter, and 32% higher than the same time last year.

Both of the down under dollars were stronger on the greenback, with the Aussie last off 0.37% at AUD 1.4446, and the Kiwi retreating 0.56% to NZD 1.5974.

Reporting by Josh White at Sharecast.com.