Asian stock markets were mixed Monday after China cut an interest rate that affects mortgage lending while investors looked ahead to this week’s Federal Reserve conference for signals about more possible U.S. rate hikes to cool surging inflation.
Shanghai advanced after the Chinese central bank nudged down its target rate for a five-year loan to shore up weak housing sales. Tokyo and Hong Kong declined. Oil prices rose nearly $1 per barrel.
Investors are watching the annual Fed meeting in Jackson Hole, Wyoming, for rates guidance after minutes last week from the U.S. central bank’s July board meeting affirmed plans for more increases despite signs of weaker economic activity.
Traders worry aggressive rate hikes this year by the Fed and central banks in Europe and Asia to contain inflation that is running at multi-decade highs might derail global economic growth.
“The Fed is still feeling inflation. Its actions have not even begun to dent inflationary pressures at all,” said Clifford Bennett of ACY Securities in a report. “Nor have they begun to crimp economic activity at all. The economic slowdown was already in play for other reasons.”
The Shanghai Composite Index rose 0.4% to 3,270.59 while the Nikkei 225 in Tokyo sank 0.4% to 28,805.52. The Hang Seng in Hong Kong shed less than 0.1% to 19,770.92.
The Kospi in South Korea gave up 0.7% to 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.
The S&P fell to 4,227.48, ending down 1.2% for the week. It is down 11.3% this year.
The Dow Jones Industrial Average dropped 0.9% to 33,706.74. The Nasdaq composite lost 2% to 12,705.22.
Technology stocks had some of the biggest losses. Microsoft fell 1.4%. Retailers, banks and communications companies also fell.
Bright spots included General Motors, which rose 2.5% after reinstating its dividend. Foot Locker soared 20% after replacing its CEO and reporting earnings that beat forecasts.
Traders are looking ahead to more U.S. earnings reports.
The Chinese central bank lowered its Loan Prime Rate, a target for market rates, as part of efforts to shore up weak economic growth after a crackdown on debt caused a real estate slump and Shanghai and other cities were shut down to fight virus outbreaks.
The target for a five-year loan was cut by 0.15 percentage points to 4.3%. The rate for a one-year loan, which affects other industries, was lowered by only 0.05 percentage points to 3.65%.
The move “reflects the seriousness" of the real estate slump and shows Beijing is “willing to take more forceful actions,” said David Chao of Invesco in a report.
Chinese leaders are trying to revive economic growth that fell to 2.5% over a year earlier in the first half of 2022 without resorting to across-the-board stimulus that might fuel inflation or push up politically sensitive housing costs.
In energy markets, benchmark U.S. crude lost 90 cents to $89.54 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international trading, shed 90 cents to $95.82 per barrel in London.
The dollar rose to 137.21 yen from Friday’s 136.91 yen. The euro gained to $1.0045 from $1.0034.
