Asian equities mixed ahead of Fed meeting after China cuts interest rates

BEIJING — Asian stock markets were mixed on Monday after China cut interest rates affecting mortgage lending, as investors looked ahead to this week’s Federal Reserve conference for signs of more potential rate hikes in the US to cool rising inflation.

Shanghai moved ahead after the Bank of China lowered its target five-year loan rate to support weak home sales. Tokyo and Hong Kong fell. The price of oil rose nearly $1 a barrel.

Investors are looking to the Fed’s annual meeting in Jackson Hole, Wyoming, for rate guidance after the minutes of last week’s US central bank board meeting in July confirmed plans for more hikes despite signs of weaker economic activity.

Traders fear that aggressive rate hikes this year by the Fed and central banks in Europe and Asia to contain inflation, which has been at the highest level for decades, could derail global economic growth.

“The Fed is still feeling inflation. Its actions have not even begun to dent inflationary pressures,” ACY Securities’ Clifford Bennett said in a report. “They haven’t even started to curb economic activity at all. The economic slowdown already played a role for other reasons.”

The Shanghai Composite Index rose 0.4% to 3,270.59, while the Nikkei 225 in Tokyo fell 0.4% to 28,805.52. The Hang Seng in Hong Kong lost less than 0.1% to 19,770.92.

South Korea’s Kospi gave in 0.7% at 2,475.35 and Sydney’s S&P ASX-200 fell 0.8% to 7,060.20. New Zealand and Singapore advanced, while Indonesia declined.

On Wall Street, the benchmark S&P 500 lost 1.3% on Friday, wiping out gains earlier in the week.

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the S&P fell to 4,227.48 and ended up 1.2% for the week. It is down 11.3% this year.

The Dow Jones Industrial Average fell 0.9% to 33,706.74. The Nasdaq composite lost 2 percent to 12,705.22 points.

Technology stocks had some of the biggest losses. Microsoft fell 1.4%. Retailers, banks and communication companies also fell.

Bright spots included General Motors, which rose by 2.5% after the dividend recovery. Foot Locker rose 20% after replacing the CEO and reporting profits that beat forecasts.

Traders are looking forward to more US earnings reports.

China’s central bank cut its Loan Prime Rate, a target for market interest rates, as part of efforts to support weak economic growth after a debt crackdown sparked a real estate crisis and Shanghai and other cities were closed to fight virus outbreaks.

The target for a five-year bond was lowered by 0.15 percentage point to 4.3%. The one-year bond rate, which affects other sectors, was cut by just 0.05 percentage point to 3.65%.

The move “reflects the seriousness” of the real estate crisis and shows Beijing’s “willingness to take stronger measures,” Invesco’s David Chao said in a report.

Chinese leaders are trying to revive economic growth, which fell to 2.5% in the first half of 2022 a year earlier, without resorting to general stimulus measures that could fuel inflation or push up politically sensitive housing costs .

In the energy markets, the US benchmark lost 90 cents to $89.54 a barrel in electronic trading on the New York Mercantile Exchange. Brent oil, the price base for international trade, lost 90 cents to $95.82 a barrel in London.

The dollar rose to 137.21 yen from 136.91 yen on Friday. The euro rose to $1,045 from $1,0034.

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