Asia markets mixed as traders digest central bank decisions, China data
Asian markets traded mixed as traders digested another round of Chinese economic data and interest rate decisions from central banks in New Zealand and South Korea.
The Japanese Nikkei 225 was up 1.45 percent. South Korea’s Kospiadded 0.82 percent, while Down Under, the S&P/ASX 200 wavered between positive and negative, before trading flat. Hong Kong’s Hang Seng index was up 0.7 percent.
Chinese markets were lower, with the Shanghai composite down 1.12 percent and the Shenzhen composite lower by 0.74 percent.
In New Zealand, the benchmark index closed up 0.79 percent at 6,508.28, after the Reserve Bank of New Zealand (RBNZ) surprised markets this morning with an interest rate cut. The central bank reduced its official cash rate by 25 basis points to 2.25 percent. A majority of the economists polled by Reuters had expected the bank to stay pat on rates.
On its website, the RBNZ said the global growth outlook has deteriorated since its December monetary policy statement, due to weaker growth in China, other emerging markets and Europe. A drop in prices for fuel and other imports are keeping headline inflation low, the bank added.
Evan Lucas, a market strategist at IG, wrote in a morning note that following the surprise rate cut this morning, “the market will clearly start pricing in at least one more 25 bps cut and possibly two. Rates could be sub-2 percent in December.”
In the aftermath of the decision, the New Zealand dollar tumbled more than a cent against the greenback, compared with around $0.68 before the announcement. The pair was at 0.6626 as of 12:27 p.m. HK/SIN time.
U.S. crude futures were lower by 0.13 percent at $38.24 as of 12:36 p.m. HK/SIN time, after settling up 4.9 percent overnight. Global benchmarkBrent was lower by 0.44 percent at $40.89, after it settled up about 4 percent at $41.07 a barrel during U.S hours.
Reuters reported overnight that the U.S. Energy Information Administration said crude stockpiles rose 3.9 million barrels last week to reach nearly 522 million barrels. However, gasoline inventories fell 4.5 million barrels.
Energy plays in the region traded mixed, with Santos adding 1.58 percent, Woodside Petroleum lower by 0.37 percent, Inpex gaining 2.85 percent and Japan Petroleum up 2.03 percent. Chinese mainland oil plays were broadly lower, with Sinopec losing 2.58 percent andPetrochina down 1.92 percent.
On the currency front, the Japanese yen retreated against the dollar, with the dollar/yen pair climbing over the 113 handle. In afternoon local time, the pair traded up 0.41 percent at 113.77.
Major Japanese exporters were mostly up, with shares of Toyota higher by 3 percent, Nissan advancing 1.9 percent and Honda up by 1.64 percent. A weaker yen is usually a positive for exporters as it increases their overseas profits when converted into local currency.
Elsewhere, Reuters reported South Korea’s central bank kept interest rates unchanged for a ninth straight month, in line with market expectations. The Bank of Korea held its base rate at 1.5 percent.
Chinese inflation data showed consumer prices in the mainland accelerated to a six-month high in February as seasonal distortions caused food prices to spike. Consumer price inflation rose 2.3 percent from a year ago, faster than January’s 1.8 percent rise and well above Reuters expectations for 1.9 percent rise. February’s expansion was the fastest annual pace of growth since July 2014, Reuters said.
Julie Wang, greater China economist at HSBC, wrote in a note that it is unlikely the higher inflation reading will reduce room for further monetary easing from the People’s Bank of China (PBOC). She also expects prices may normalize within around two months.
“Against the backdrop of sluggish economic activities, we think the PBOC will likely persist with an accommodative monetary policy in order to support growth,” she added.
Major U.S. indexes closed higher overnight, with the Dow Jones industrial average up 0.21 percent, the S&P 500 higher by 0.51 percent and the Nasdaq composite up 0.55 percent.
Source: CNBC
