Asia markets mostly lower as Fed hike fears weigh on investors; China cuts key lending rates

Visitors stands in front of an electronic ticker at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Monday, Nov. 30, 2020.
Toru Hanai | Bloomberg via Getty Images

Shares in the Asia-Pacific region were mostly lower on Monday as concerns over aggressive Fed hikes reemerged, but Chinese markets rose after China cut its benchmark lending rates.

The Shanghai Composite was 0.61% higher at 3,277.79, and the Shenzhen Component gained 1.19% to 12,505.68.

China's central bank cut its one-year benchmark lending rate by 5 basis points to 3.65% and its five-year rate by 15 basis points to 4.3%.

"We think the asymmetric cuts … aim to support long-term borrowing and in particular mortgages, as overall credit supply remains ample while credit demand is sluggish," analysts said in a Goldman Sachs Economic Research note Monday.

Elsewhere in Asia, Hong Kong's Hang Seng index was down 0.6% in the final hour of trade.

The Nikkei 225 in Japan pared some losses but was down 0.47% at 28,794.5 and the Topix index slipped 0.1% to1,992.59.

South Korea's Kospi shed 1.21% to 2,462.5 and the Kosdaq lost 2.25% to 795.87.

The S&P/ASX 200 in Australia dipped 0.95% to end the session at 7,046.9.

MSCI's broadest index of Asia-Pacific shares outside of Japan was 0.95% lower.

"Recent Fed speakers have been stressing the message that more rate hikes are coming given the fight against inflation has not yet been won," Rodrigo Catril, a currency strategist at National Australia Bank wrote in a Monday note.

Investors are looking ahead to the Fed's annual Jackson Hole economic symposium which begins Thursday stateside.

Australia cement maker Adbri's stock plunges 16% after posting profit decline

Shares of Australian cement maker Adbri plunged after posting a 15% decline in net profit for the first six months of the year compared to the same period a year ago.

Adbri's stock dropped more than 16.54% on Monday.

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Net profit stood at 48.1 million Australian dollars ($33.2 million), while first half revenue increased 8% year-on-year to $812.4 million Australian dollars. It was "driven primarily by strong construction and mining sector demand and improved pricing across most products," the company said in a report.

Underlying net profit after tax was hit in part by operational challenges related to extreme wet weather events on the east coast of Australia and higher costs, the company said.

— Abigail Ng

The Reserve Bank of New Zealand wants rates 'comfortably above neutral,' Reuters reports

Policymakers in New Zealand want interest rates to be "comfortably above neutral" to fight rising prices, Reserve Bank of New Zealand Deputy Governor Christian Hawkesby said, according to Reuters.

The RBNZ raised its cash rate by 50 basis points to 3% last week. Hawkesby told Reuters the central bank considered 25 or 75 basis point hikes.

He said taking the official cash rate above neutral would bring down inflation and "afford us some breathing space to see how things are playing out."

"Once we get the [official cash rate] up into that 4%-4.25% level we're seeing things evenly balanced from there. So we'd put equal weight on having to put the OCR up as we would putting it down," he added.

Hawkesby said policymakers are expecting the economy to cool and acknowledge that uncertainties lie ahead.

— Abigail Ng

IMF to head to Colombo for more economic solutions

The International Monetary Fund will visit Colombo this week to continue discussions with Sri Lankan authorities on economic and financial reforms and policies.

"The objective is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near term," the IMF said in a statement on the weekend.

"Because Sri Lanka's public debt is assessed as unsustainable, approval by the IMF Executive Board of the EFF program would require adequate assurances by Sri Lanka's creditors that debt sustainability will be restored."

The IMF had already concluded a first-round discussion in late June when it worked on a macroeconomic and structural policy package with Colombo "to correct macroeconomic imbalances, restore public debt sustainability, and realize Sri Lanka's growth potential."

Other challenges that need to be resolved include containing rising levels of inflation and addressing the severe balance of payments pressures.

The EEF is the IMF's lending facility and helps countries deal with balance of payments, or cashflow, problems.

— Su-Lin Tan

CNBC Pro: How to reduce risk in your portfolio right now, according to the pros

Stocks have been volatile this year, as a mix of recession fears, inflationary pressure and other macro risks roil markets.

Here are three ways that investors can adjust their portfolios to lower their risks or mitigate losses, according to Goldman Sachs, Wells Fargo and others.

Pro subscribers can read more here.

— Weizhen Tan

China's central bank cuts benchmark lending rates

The People's Bank of China cut its one-year benchmark lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.

That brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters expected a 10-basis-point cut to the one-year LPR, and half of the survey respondents expected the five-year rate to be lowered by 15 basis points.

— Abigail Ng

CNBC Pro: JPMorgan predicts when the rally in growth stocks will end

Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are deciding whether to rotate into safer bets instead.

JPMorgan, however, thinks the rally still has further to go, and named several indicators to watch for when considering a rotation out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ong

What to expect from Powell’s Jackson Hole speech

Fed Chairman Jerome Powell is expected to speak at the central bank's annual symposium in Jackson Hole, Wyoming this week, and shed some light on the pace of future interest rate hikes.

Powell may advance hawkish comments from Fed officials who recently underscored their commitment to fighting inflation, even as investors enjoyed a summer rally partly on expectations of a less aggressive Fed.

Still, St. Louis Fed President James Bullard said in an interview last week with the Wall Street Journal that he is considering another 0.75 percentage point interest rate hike at the September meeting.

Check out CNBC Pro for more on what to expect from the Fed chair.

— Sarah Min

China is set to lower its benchmark lending rates, Reuters poll predicts

China is set to release its loan prime rates (LPR) on Monday, and analysts widely expected cuts according to a Reuters poll.

Majority of analysts predicted the one-year benchmark lending rate to be lowered by 10 basis points, while they expected the five-year LPR to be cut by more than 10 basis points.

Around half of the poll's 30 participants forecast a 15-basis-point cut, Reuters reported.

The one-year LPR is currently at 3.7% after a cut in January, and the five-year rate is at 4.45%. China cut the five-year LPR by 15 basis points in May, in a move that was said to support housing demand.

— Abigail Ng

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