Tokyo cautious, Hong Kong on the rise, mainland Chinese markets with a negative sign. Investors await the Fed and ECB minutes
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The Tokyo Stock Exchange begins trading with caution, after the retracement of US stock indices and awaiting indications on interest rates from the central bank in China. The Nikkei reference list shows a slightly positive change of 0.08% at 38,500.88, with a gain of 30 points. On the currency market, the yen began to depreciate slightly against the dollar at 150.20 and against the euro at 161.80.
Hong Kong starts on the rise, driven by data relating to the increase in spending recorded in China during the long Lunar New Year holiday: the Hang Seng index initially rises by 0.3%, reaching 16,222.09 points.
Chinese stock markets started in negative territory, despite the 25 basis point cut to 3.95% decided by the Central Bank (PBOC) on the 5-year primary lending rate (LPR), in efforts to revive the economy in difficulty: the Shanghai Composite index initially lost 0.57%, to 2,893.85 points, while that of Shenzhen lost 0.56%, to 1,595.15 points. The five-year LPR rate is the benchmark for real estate mortgages, in the midst of the serious crisis in the sector which is weighing on the stability of the economy.
The Chinese central bank cuts the prime rate on 5-year loans
The Chinese Central Bank has in fact cut the 5-year prime lending rate (LPR) by 25 basis points, bringing it to 3.95% from 4.20%, in efforts to revive the struggling economy: this is the first cut of its kind since August and the highest ever recorded on the real estate mortgage benchmark, in the midst of the serious crisis in the sector. The one-year loan prime rate, however, remains unchanged at 3.45%, among the preferential rates offered by commercial banks to the best customers and a reference for those applied to other loans.
The latest interventions on LPR rates date back to August (one year) and June (5 years): both are at historic lows, in the PBOC’s efforts to encourage commercial banks to grant more credit and at more advantageous rates. And they follow a trend in stark contrast to most other major economies, which are instead raising rates to curb inflation. The decision was anticipated on Sunday on its official WeChat account by the Financial News, a newspaper supported by the Central Bank, quoting market operators: «The lowering of the five-year LPR will help stabilize confidence, promote investment and consumption, and will also help to support stable and healthy developments in the real estate market”.
The focus of his verbal Fed is Bce
Investors, however, are watching with interest the release between Wednesday and Thursday of the minutes of the latest meeting of the Federal Reserve and that of the European Central Bank, to find some clues on the date of the first cut in interest rates after the inflation findings, more higher than expectations.
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