Asian markets mostly up, China rate cut helps property sector
HONG KONG – Markets mostly rose Thursday in Asia as investors tentatively returned to buying after recent losses, with Chinese property firms enjoying a much-needed lift on fresh easing measures by the country’s central bank.
Signs that Beijing was on a new monetary easing course also provided some crucial support to the tech giants who have been hammered in recent months as they were caught in the clutches of a wide-ranging, private-sector clampdown.
The People’s Bank of China on Thursday lowered a key bank lending rate for the second time in as many months, days after slashing its policy rate for the first time since the pandemic struck.
The move was the latest aimed at boosting the world’s number two economy, which has been crippled by lockdowns to stem fresh Covid outbreaks as well as a sharp slowdown in the vast property sector, a key driver of growth.
Chinese property firms will be among the biggest winners as the easing improves their chances of accessing much-needed funds to repay monumental debts that have threatened their future and raised concerns of contagion in the broader economy.
However, the market mood remains grounded by concerns about the US Federal Reserve’s monetary policy plans as it battles soaring inflation, which has been stoked by a cocktail of surging demand, supply chain snarls, rising wages and a spike in energy prices.
Speculation is now growing that the bank will have to lift interest rates four times or more this year.
Some analysts are tipping a 50 basis-point hike in March, the first such move since 2000, while the bank has also said it plans to offload the bond holdings on its books that have helped keep costs down.
The inevitable end of the era of ultra-cheap cash — which helped fuel a near two-year equity rally and economic rebound — has weighed on global markets for months.
While some have managed to eke out record or multi-year highs, analysts warn that the next few months could see some gyrations.
One of the main losers has been the Nasdaq on Wall Street, which on Wednesday fell into a correction — a decline of greater than 10 percent from its most recent peak — as tech giants are more susceptible to higher borrowing costs.
The Dow and S&P 500 have also suffered.
“The market is now facing uncertainty regarding both rate hikes and the balance sheet,” said Steven Englander at Standard Chartered Bank.
“We therefore see scope for the recent volatility to continue near term”.
Still, Asia was faring much better.
Hong Kong gained 1.9 percent thanks to a rally in tech giants including Alibaba, Meituan, Tencent and JD.com, while property firms also enjoyed healthy gains.
China Evergrande, which has been teetering for months, was up more than three percent, while Sunac added 10 percent and Country Garden gained seven percent.
Shanghai was also in positive territory, gaining 0.4 percent in morning trade.
“The new cycle of easing has come as expected,” Xu Chi, at Zhongtai Securities, said. “We should remain positive on the stock market” as risk appetite is set to improve.
Tokyo, Singapore, Seoul, Bangkok and Jakarta also rose but Sydney, Wellington and Taipei edged down.
Oil markets dipped after a strong run-up this week on the back of expectations for improved demand as economies reopen and as unrest in the crude-rich Middle East sparks supply concerns.
The International Energy Agency lifted its forecast for 2022 consumption to 99.7 million barrels per day, above the pre-Covid level.
Both main contracts are also homing in on the $90 mark, having broken to seven-year highs earlier in the week, while some commentators are predicting Brent could bust past $100 next year.
Key figures around 0320 GMT
Tokyo – Nikkei 225: UP 0.5 percent at 27,594.29 (break)
Hong Kong – Hang Seng Index: UP 1.9 percent at 24,584.73
Shanghai – Composite: UP 0.4 percent at 3,570.83
West Texas Intermediate: DOWN 0.5 percent at $86.55 per barrel
Brent North Sea crude: DOWN 0.2 percent at $88.23 per barrel
Euro/dollar: UP at $1.1353 from $1.1351 late Wednesday
Pound/dollar: UP at $1.3624 from $1.3610
Euro/pound: UP at 83.36 pence from 83.31 pence
Dollar/yen: DOWN at 114.30 yen from 114.33 yen
New York – Dow: DOWN 1.0 percent at 35,028.65 (close)
London – FTSE 100: UP 0.4 percent at 7,589.66 (close)
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