Asia report: Markets mixed as PBOC takes wraps off new rates
By Josh White
Date: Tuesday 20 Aug 2019
(Sharecast News) - Markets in Asia finished in a mixed state on Tuesday, as the People's Bank of China took the wraps off its new loan prime rates, calculated under a new mechanism, and investors digested the latest policy meeting minutes from the Reserve Bank of Australia.
In Japan, the Nikkei 225 was up 0.55% at 20,677.22, as the yen strengthened 0.31% against the dollar to last trade at JPY 106.31.
Of the major components on the benchmark index, automation specialist Fanuc was up 0.94%, while fashion firm Fast Retailing lost 0.3% and technology conglomerate SoftBank Group was 0.86% weaker.
The broader Topix index was ahead 0.83% in Tokyo, ending its trading day at 1,506.77.
On the mainland, the Shanghai Composite slipped 0.11% to 2,880.00, and the smaller, technology-heavy Shenzhen Composite was 0.14% stronger at 1,574.12.
The People's Bank of China unveiled its new loan prime rates, which were worked out using a new mechanism that was first reported over the weekend.
Its new one-year loan prime rate was set at 4.25%, down from 4.1%, while the five-year rate was 4.85%.
A number of analysts were describing the reformed mechanism as a sort of guided cut to interest rates.
South Korea's Kospi was 1.05% firmer at 1,960.25, while the Hang Seng Index in Hong Kong slid 0.23% to 26,231.54.
The blue-chip technology stocks were both higher in Seoul, with Samsung Electronics up 1.95%, and chipmaker SK Hynix rising 1.73%.
Oil prices were lower as the region went to bed, with Brent crude last down 0.27% at $59.58, and West Texas Intermediate off 0.36% at $55.94.
Sentiment was more buoyant in the region with fears of recession appeared to be easing somewhat, according to some market watchers, as prices for a number of safe haven assets lost steam.
"Stimulus optimism is fueling risk appetite this week after risk sentiment took a hammering of late," said London Capital Group head of research Jasper Lawler.
"With expectations of further support for struggling economies, investors are once again prepared to pick up riskier assets like equities."
Lawler noted that markets were also seeing flows out of havens such as the Japanese yen, gold - which had sunk back towards $1480 - and bonds.
"Bond yields have rebounded following last weeks' inversion, easing recession fears whilst supporting risk sentiment."
In Australia, the S&P/ASX 200 was 1.2% higher, finishing its trading session at 6,545.00, with almost all subindices ending up in the green.
The Reserve Bank of Australia released its July meeting minutes on Tuesday, which showed the central bank was open to further easing.
It said it would consider the prospect if "this was needed to support sustainable growth in the economy and the achievement of inflation over time".
The Reserve Bank stood pat on interest rates in August, keeping them at all-time lows after lowering the official cash rate by 25 basis points in each of June and July.
Across the Tasman Sea, New Zealand's S&P/NZX 50 was ahead 0.9% at 10,803.84, with Napier Port Holdings surging 13.5% on its debut.
The stock arrived on the market as the Hawke's Bay Regional Council floated 45% of the port facility, located on the south east coast of the country's North Island, netting the regional authority a NZD 234m payday.
It was a mixed day for the down under dollars against the greenback, with the Aussie last 0.18% stronger at AUD 1.4756, while the Kiwi weakened 0.01% to NZD 1.5604.
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