China’s cut in the loan prime rate failed to inspire optimism among investors
United States stock markets were closed on Monday in honor of Presidents Day. In Asia, equities were mixed on Tuesday as investors digested news from China. The People’s Bank of China cut its five-year loan prime rate by 25 basis points to 3.95%, and kept one- and five-year LPR unchanged at 3.45%. The cut to the five-year rate is aimed at supporting the recovery of the property market. However, bigger-than-expected cut in the loan prime rate failed to inspire optimism among investors amid persistent concerns over high US interest rates.
Hong Kong’s Hang Seng index was 0.57% higher, Japan’s Nikkei 225 traded 0.10% lower but was still close to record highs, while South Korea’s Kospi shed 0.84%, coming under pressure from losses in technology stocks. In Australia, the S&P/ASX 200 closed less than 0.1% lower. The bluechip Shanghai Composite index managed to erase early losses and finished 0.42% higher, still remaining in sight of 2024 lows after the worst performance in the region through 2023.
In Europe, stocks opened lower on Tuesday as risk sentiment continued to deteriorate, with the pan-European Stoxx 600 index was 0.3% lower in early deals. In individual stocks, shares of Barclays rose over 5% after the bank announced a major operational overhaul including substantial cost cuts, in its fourth-quarter results.
In currencies, the US dollar remains little changed, staying within a tight trading range these days. The USD index has settled above the 104.00 figure, facing the 104.40 immediate barrier that capped the bullish attempt earlier in the day. In looks like the greenback could continue to struggle for direction in the near term, with market focus shifting towards the FOMC meeting minutes due on Wednesday. The minutes could bring some volatility into the USD pairs, with direction depending on the Fed’s tone. A hawkish rhetoric may send the dollar higher across the board.