Asia report: Markets mixed as China keeps loan prime rates steady

20th Aug 2024 09:09

(Sharecast News) - Asia-Pacific markets finished with a mixed performance on Tuesday, following a strong rally on Wall Street overnight.

Investors also weighed the minutes from the Reserve Bank of Australia's recent meeting, while China held its benchmark rates steady.

"Following an unexpected reduction in July, the People's Bank of China maintained its benchmark loan prime rate steady, causing Asian stocks to trade mostly higher," said TickMill market analyst Patrick Munnelly.

"The MSCI ACWI Index, which encompasses both emerging and mature equities, is poised to extend its winning streak to nine consecutive days, the longest since December."

Munnelly noted that Japan's Nikkei share average rose in tandem with Wall Street, overcoming the impact of the yen's recent gains, as an optimistic US economic outlook continued to bolster risk appetite globally.

"The Nikkei regained the 38,000 handle, recovering from the previous session's losses after the yen's appreciation weighed on Japanese equities."

Japan leads gains on mixed day for region

In Japan, the Nikkei 225 jumped 1.8% to 38,062.92, leading the gains in the region.

The broader Topix index also rose by 1.11%, closing at 2,670.54.

Notable performers on Tokyo's benchmark included Mercari, M3, and Sharp Corporation, which saw substantial gains of 8.68%, 8.07%, and 7.07%, respectively.

In contrast, Chinese markets experienced declines.

The Shanghai Composite fell 0.93% to 2,866.66, and the Shenzhen Component decreased by 1.24%, ending at 8,252.87.

Shares of MicroPort Endovascular MedTech, Shanghai Laimu Electronics, and Zhejiang Wazam New Materials plummeted, with losses ranging from 9.98% to 13.89%.

Hong Kong's Hang Seng Index edged down by 0.33% to 17,511.08.

Major decliners included Hengan International Group, China Resources Beer, and JD Health International, which dropped between 4.75% and 6.46%.

South Korea's Kospi gained 0.83%, reaching 2,696.63.

DB Insurance, Samsung Securities, and Hanwha Ocean led the advance with increases of 8.77%, 4.82% and 4.79%, respectively.

In Australia, the S&P/ASX 200 inched up by 0.22% to 7,997.70.

Judo Capital, Reliance Worldwide Corporation, and NUIX saw notable gains of 8.9% to 10.47%.

New Zealand's S&P/NZX 50, however, fell by 0.82% to 12,558.08.

Fletcher Building, Mercury NZ, and Manawa Energy were the biggest decliners, with losses of 3.41%, 2,94% and 2.68%, respectively.

In currency markets, the dollar was last 0.1% weaker on the yen, trading at JPY 146.45, while it lost 0.38% against the Kiwi to NZD 1.6297.

The greenback did manage gains of 0.07% on the Aussie, however, changing hands at AUD 1.4868.

Oil prices dropped, with Brent crude futures last down 1.13% on ICE at $91.62 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.17% to $73.50.

China maintains loan prime rates, RBA releases August meeting minutes

In economic news, ratesetters in China maintained loan prime rates (LPR), holding the one-year LPR at 3.35% and the five-year LPR at 3.85%.

The decision aligned with expectations from a Reuters poll.

Corporate loans are influenced by the one-year LPR while the five-year LPR guides mortgage rates in China.

In Australia, the Reserve Bank released the minutes from its August meeting, where it kept its benchmark interest rate unchanged at 4.35%.

Despite ongoing concerns about persistent inflation being "above target", the RBA decided against raising rates due to insufficient new data.

The central bank acknowledged the potential for future rate adjustments, but cautioned that significant rate cuts in the near term were unlikely.

Meanwhile, South Korea's consumer sentiment in August declined to 100.8, down from a two-year high of 103.6.

Local news agency Yonhap attributed the drop to fears of a potential US recession and its impact on the stock market.

A sentiment index above 100 indicates that optimists still outweigh pessimists, but the recent decrease reflected growing caution among consumers.

Reporting by Josh White for Sharecast.com.