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Asian Markets Slug as China’s PBOC keeps Benchmark Lending Rate Unchanged

Stocks in Asia Pacific fell on Thursday afternoon trade as China kept its benchmark lending rate on hold.

South Korean stocks were among the biggest losers regionally, with the Kospi dropping 3.66% to close at 2,274.22. The moves came as local news agency Yonhap reported Thursday daily new coronavirus cases in the country rising by triple digits for the seventh straight day.

Over in Taiwan, the Taiex slipped 3.26% to end its trading day at 12,362.64.

Hong Kong’s Hang Seng index dropped 1.83%, as of its final hour of trading. Mainland Chinese stocks were lower on the day, with the Shanghai composite down 1.3% to about 3,363.90 while the Shenzhen component shed 1.186% to around 13,320.92.

In Japan, the Nikkei 225 slipped 1% to close at 22,880.62 while the Topix index shed 0.9% to finish its trading day at 1,599.20.

Over in Australia, the S&P/ASX 200 declined 0.77% to close at 6,120. Overall, the MSCI Asia ex-Japan index dropped 1.77%.

China on Thursday announced no changes to its benchmark lending rate, with the one-year loan prime rate (LPR) kept at 3.85%, while the five-year LPR was on hold at 4.65%. That was in line with expectations from the majority of the participants in a Reuters survey who predicted no change to either rate.

Markets in Indonesia and Malaysia were closed on Thursday for a holiday.

Federal Open Market Committee members agreed at their latest meeting in late July that the ongoing situation surrounding the coronavirus pandemic could “weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term,” according to the meeting minutes. The U.S. Federal Reserve kept rates unchanged last month.

“I think the main thing that the Fed said which has upset the markets is you know, they kind of poured cold water on the idea of capping bond yields,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Street Signs” on Thursday. “This is something that a lot of investors had assumed the Fed would do as a next step.”

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.035 after seeing an earlier spike from levels below 92.5.

The Japanese yen traded at 106.05 per dollar following a weakening yesterday from levels below 105.6 against the greenback. The Australian dollar changed hands at $0.717 after dropping from above $0.725 yesterday.

Oil prices were lower in the afternoon of Asian trading hours, with international benchmark Brent crude futures down 0.66% to $45.07 per barrel. U.S. crude futures also shed 0.93% to $42.53 per barrel.