Asian stocks bounce as China moves to boost housing

ryanniesMay 20, 2022

Shanghai — Asian equities surged on Friday after China lowered key lending benchmarks to support the slowdown, but global equities gauges are record as investors fear slowing growth It remained set to the longest consecutive weekly losses.

China reduced its five-year loan prime rate (LPR) by 15 basis points on Friday morning. This was significantly lower than expected as authorities are trying to mitigate the economic slowdown by reviving the housing sector. Five-year interest rates affect mortgage pricing.

The broadest index of MSCI non-Japanese Asia Pacific equities was built rapidly on the basis of an early rise after the cut, rising by more than 1.8%.

European equities are set to follow Asia’s leadership, with global Eurostocks 50 futures, German DAX futures and FTSE futures all rising by more than 1%.

China’s Blue Chip also rose 1.8%, boosted by foreign purchases, Hong Kong’s Hang Seng Index rose more than 2%, and Australia’s stock price rose 1.1%. In Tokyo, the Nikkei Stock Index rose 1.3%.

Carlos Casanova, Senior Asian Economist at Union Banke Apriby, said: In Hong Kong.

Despite rising Asian stocks, MSCI’s national price index maintained its longest seven consecutive weeks of deficit since its inception in 2001. It will also be the longest, including backtest data up to January 1988. ..

Investors are throwing away stocks because of concerns about the impact of a destroyed supply chain on inflation and growth. On Thursday, Cisco Systems Inc fell to its 18-month low after warning that component shortages would continue due to the impact of China’s COVID blockade.

On Friday, a financial hub in Shanghai, China, announced three new COVID-19 cases outside the quarantine area, hurting residents’ expectations for a smooth end of regulation. ..

Due to the effects of coronavirus regulations, industrial production in the city in April decreased by more than 60% year-on-year.

“The focus of (China’s) officials was to devise mitigation policies to mitigate the effects of COVID curtailment … the problem is that such mitigation policies are as long as they are well implemented. It has no real impact. ” Christopher Wood, Global Head of Equity for Jeffreys.

The rise in Asia came after the late rebound on Wall Street slowed, the Dow Jones Industrial Average fell 0.75%, the S & P 500 fell 0.58%, and the Nasdaq Composite fell 0.26%. rice field.

Stronger yuan

In the currency market, the dollar index receded from its previous slight rise to 102.79, down 0.12%, heading for the first losing week in seven weeks.

Movement elsewhere was restrained and the dollar was just on the strong side of the flat against the 127.76 safe yen. The euro was barely high at $ 1.0586, erasing previous losses.

The Chinese yuan recorded a significant move, rising from a 0.32% decline to a two-week high of $ 6.6699. The more freely traded offshore yuan also reached a high of $ 6.6855 in two weeks.

Following China’s LPR cut, yields on long-term government bonds rose, but were later eased, reflecting rising equities.

The US 10-year yield was last at 2.855%, flat from Thursday’s closing price and down from Friday’s 2.922% high. The two-year yield rose to 2.6327% compared to the US closing price of 2.611%.

After the announcement of China’s LPR, crude oil prices held back losses, but then prices fell due to concerns that a slow recovery in demand could slow.

Brent crude finally fell 0.53% to $ 111.45 a barrel, and US West Texas intermediate crude fell 1.21% to $ 110.85 a barrel.

Gold rose and was set for the first weekly rise since mid-April, supported by the weaker dollar. Spot gold rose 0.26% to $ 1,846.49 per ounce.

(Report by Andrew Galbraith; edited by Lincoln Feast and Sam Holmes)