SINGAPORE — Markets in Asia-Pacific were mixed on Thursday as China cut its key lending rates. Meanwhile, Wall Street fell with the Nasdaq closing in correction territory and U.S. yields retreating from their recent gains.
Mainland China markets rose, with the Shanghai composite near the flatline, and the Shenzhen component up 0.35%. Hong Kong’s Hang Seng index jumped 2.18%.
China on Thursday cut its one-year loan prime rate by 10 basis points, while its five-year LPR, which influences the pricing of home mortgages, was cut by 5 basis points, the first time since April 2020.
Stocks of Chinese property firms, which have been reeling under a debt crisis in the country, responded. The Hang Seng Properties index jumped 1.84%, as Sunac surged more than 10%, while Shimao also jumped more than 10% and Country Garden topped 7%.
The rate cuts continue the PBOC’s efforts to push down borrowing costs, according to Capital Economics.
“Mortgages will now be slightly cheaper which should help shore up housing demand. The PBOC has already pushed banks to increase the volume of mortgage lending,” Sheana Yue, China economist at the firm, said in a note after the announcement.
“Targeted support for property buyers does appear to be limiting one of the more severe downside risks facing the economy,” Yue added.
Japan’s Nikkei 225 also jumped, climbing 1%, while the Topix was also up nearly 1%. Sony rose nearly 4%, after tumbling over 12% the day before after Microsoft on Tuesday said it was buying video game publisher Activision Blizzard for almost $69 billion.
Trade data on Thursday showed that Japan’s exports rose 17.5% in December compared to the year before — higher than the 16% expected in a Reuters poll, according to Reuters.
On Wall Street overnight, the Nasdaq Composite fell again Wednesday, dipping 1.15% to 14,340.26. That brought its decline from its November high to more than 10% as investors continue to dump tech shares as interest rates spike.
The Dow Jones Industrial Average fell 339.82 points to 35,028.65, dragged down by a 3.1% decline in Caterpillar‘s stock. The S&P 500 slid nearly 1% to 4,532.76.
U.S. bond yields fell back slightly after shooting up earlier this week, with the 10-year retreating to 1.854% after hitting 1.9% earlier Wednesday. The yield on the 30-year Treasury bond fell 2 basis points to 2.167%. Yields move inversely to prices.
“It is hard to get too excited with the overnight declines in yields, the economic backdrop is still pointing to an increase in inflationary pressures and resilient growth, pointing to the need for the Fed as well as other central banks to shift towards a tighter policy setting, thus higher global rates over 2022 still look very likely,” Rodrigo Catril, senior FX strategist at National Australia Bank, wrote in a Thursday note.
Elsewhere, price worries continued to be top-of-mind as data showed the U.K. inflation rate soared to a 30-year high in December, with higher energy costs, resurgent demand and supply chain issues continuing to drive up consumer prices.
Oil prices rose for a fourth day to a seven-year high overnight, as an outage on a pipeline from Iraq to Turkey heightened worries. Brent crude climbed to as much as $89.05, its highest since Oct. 13, 2014, while U.S. crude was 1.8%, higher at $86.96 per barrel.
During Asia time on Thursday, oil prices retreated. U.S. crude fell 0.47%% to $86.55, while Brent dipped 0.36% to $88.12.
In currencies, the U.S. dollar index, which tracks the greenback against a basket of its peers, was at 95.617, off slightly from levels above 95.7 earlier.