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22/08/
2023

Today’s Announcements & News

Asia

Asia-Pacific markets displayed mixed performances on Monday following China’s announcement of changes in its loan prime rates (LPR). Here’s an overview of the key developments:

China adjusted its one-year LPR by reducing it by 10 basis points, from 3.55% to 3.45%, in a move aimed at lowering borrowing costs for businesses and consumers. However, the five-year LPR, which also influences mortgage rates, remained unchanged at 4.2%. This decision came after China’s central bank surprised markets by lowering the medium-term lending facility rate the previous week.

Hong Kong’s Hang Seng index experienced a decline of 1.8% during the trading session.

Mainland Chinese markets also saw negative movements, with the CSI 300 index falling by 1.44% and closing at 3,729.56. This marked its lowest level since November 2022.

Australia’s S&P/ASX 200 index slipped by 0.46%, reaching its lowest point since July 11 and closing at 7,115.5.

Japan’s Nikkei 225 index showed signs of recovery, posting a gain of 0.32% and closing at 31,565.64. The Topix index also rose by 0.24% to end at 2,241.49.

South Korea’s Kospi index gained 0.17%, snapping a six-day losing streak and closing at 2,508.8. The Kosdaq index performed even better, closing 1.3% higher at 888.71.

China’s decision to reduce the one-year LPR is aimed at supporting economic growth by making borrowing more affordable. However, concerns about China’s economic outlook and the impact of regulatory changes continue to influence market sentiment and keep investors cautious.

US

On Monday, the Nasdaq Composite managed to halt its four-day losing streak, a significant feat given the surging Treasury yields. Here’s a summary of the day’s market movements:

The Nasdaq Composite, known for its tech-heavy components, surged by 1.6% to close at 13,497.59, marking its most substantial one-day gain since July 28.

The broader S&P 500 index also posted gains, closing with a 0.69% increase at 4,399.77.

In contrast, the Dow Jones Industrial Average experienced a minor decline of 0.11%, closing at 34,463.69.

Noteworthy stock performances included Palo Alto Networks, which soared 14.5% on the back of better-than-expected earnings, and Nvidia, which gained 8.3% ahead of its upcoming earnings report scheduled for Wednesday. Tesla and Meta also saw notable gains of 7% and 2.4%, respectively. The S&P 500’s tech sector recorded a substantial gain of 2.26% during the day.

It’s worth highlighting that these gains occurred in the face of rising Treasury yields, with the benchmark 10-year Treasury note yield reaching 4.34%, its highest level since November 2007. Typically, surging yields are considered unfavorable for tech and other growth stocks, as they can diminish the present value of future earnings. Nevertheless, tech stocks made significant gains on this particular day.

Commodity

On Monday, both Brent and U.S. crude oil prices ended in the red due to waning hopes of increased Chinese demand, primarily driven by concerns surrounding China’s economic recovery.

John Kilduff, a partner at Again Capital, noted, “It seems that (China’s recovery) is not going to happen. It’s doubtful they’re going to be buying. They bought a lot of crude for storage earlier in the year. They’re sitting on a lot of crude.”

Here’s a summary of the day’s oil and gold price movements:

Brent crude oil concluded the day with a loss of 34 cents, settling at $84.46 per barrel, marking a 0.4% decrease.

U.S. West Texas Intermediate (WTI) crude oil fared similarly, closing at $80.72 per barrel with a loss of 53 cents or 0.65%. It’s worth noting that both benchmarks experienced intraday gains of up to $1 before reversing course.

Meanwhile, gold prices remained near a five-month low on Monday, largely due to the persistent pressure from elevated bond yields. Spot gold saw a marginal increase of 0.3%, reaching $1,893.82 per ounce by 02:13 p.m. ET (1813 GMT). However, it remained close to the five-month low of $1,883.70 touched on the preceding Friday. U.S. gold futures recorded a 0.3% gain as well, settling at $1,923.00.

Investors are closely monitoring the U.S. Federal Reserve’s Jackson Hole symposium later in the week, hoping to gain more clarity on the future interest rate trajectory, which has been influencing gold’s performance.

 

The above analysis is only for the views of market researchers and is for reference only and is not regarded as a specific investment suggestion.

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