Indian Morning Briefing: Mixed Asian Markets; China’s PBOC cuts benchmark lending rates

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GLOBAL MARKETS 
DJIA             35028.65   -339.82    -0.96% 
Nasdaq           14340.26   -166.64    -1.15% 
S&P 500           4532.76    -44.35    -0.97% 
FTSE 100          7589.66     26.11     0.35% 
Nikkei Stock     27582.03    114.80     0.42% 
Hang Seng        24528.99    401.14     1.66% 
Kospi            2847.61       5.33     0.19% 
SGX Nifty*      17907.00      -70.5    -0.39% 
*Jan contract 
 
USD/JPY     114.29-30   -0.03% 
Range       114.42   114.03 
EUR/USD     1.1350-53   +0.07% 
Range       1.1367   1.1341 
 
CBOT Wheat March $7.964 per bushel 
Spot Gold $1,842.11/oz  0.1% 
Nymex Crude (NY) $86.40 $0.97 
 
 
US STOCKS 

US stocks gave up early gains and fell, extending a recent string of losses that dragged major indexes lower to start the year.

The tech-heavy Nasdaq composite index lost 1.15% and ended the day 10.5% below its all-time closing high from last November. A decline of more than 10% is considered a correction for a stock market index.

The S&P 500 fell 1%. The benchmark indicator lost 1.8% on Tuesday, its second decline in three trading days. The Dow Jones Industrial Average also fell 1%. Some of the largest US lenders reported higher earnings before the market opened. Shares of Bank of America rose 0.4% after the lender reported higher fourth-quarter profits, while shares of Morgan Stanley gained 1.8% on earnings that beat forecasts.

Recent volatility is “really about inflation and how aggressive central banks are in countering it,” said Brian O’Reilly, head of market strategy at Mediolanum Asset Management, adding that inflation could also be a drag. economic growth by hitting consumption. “Certainly the market is nervous right now,” he said.

 
 
ASIAN STOCKS 

Japanese stocks rose, driven by gains in electronics stocks, as bargain hunting began after Wednesday’s sell-off. Sony Group gained 3.6% after Wednesday’s 13% decline caused by concerns over new competition for its video game business from the combination of Microsoft and Activision Blizzard. Investors were focusing on Covid-19 infection trends and government countermeasures as well as U.S. economic data to gauge the pace of potential Fed rate hikes. The Nikkei Stock Average rose 0.8% to 27,680.05.

The South Korean Kospi edged up 0.1% to 2845.08 in early mixed trading. Gains in defense and steel stocks offset losses in technology and banking stocks. Bargain hunting after a five-game losing streak supported the benchmark, but concerns about the pace of the Fed’s interest rate hike weighed on investor sentiment. Defense stocks were higher according to local reports that the country is seeking to develop its own early warning aircraft.

Hong Kong’s Hang Seng Index gained 1.5% to 24,493.03 in early trading, supported by some property and technology stocks. The Chinese central bank’s cut in its benchmark lending rates supported market sentiment, KGI Securities said.

Chinese stocks were higher overall, after the country’s central bank cut benchmark lending rates as part of its effort to support a slowing economy in the face of a fresh wave of coronavirus cases. China’s zero-Covid policy efforts will remain front and center ahead of the Chinese New Year travel season and the upcoming Winter Olympics, IG said. The Shanghai Composite Index was up 0.3% at 3,567.72, the Shenzhen Composite Index was flat at 2,441.71 and the ChiNext Price Index rose 0.3% at 3,085. .88. Bank stocks rose, with Agricultural Bank of China gaining 0.3% and Bank of Shanghai 0.1%.

 
FOREX 

Asian currencies were mixed against the US dollar, but could be supported by the PBOC’s cuts to one- and five-year prime lending rates for the first time in 21 months and gains in some regional equity markets. PBOC actions are proactive in supporting China’s economic growth, according to ING. However, the question remains whether banks will respond by increasing lending, he adds. USD/CNY was little changed at 6.3453, USD/SGD fell 0.1% to 1.3469 and USD/KRW gained 0.2% to 1,190.33.

 
METALS 

Gold edged higher in the Asian morning session amid possible safe-haven demand spurred by losses in regional equity markets. The overnight drop in the 10-year Treasury yield also boosted investor demand for the non-performing precious metal, ANZ said. The first six months of a Fed tightening cycle are typically negative for the USD, which could provide continued support for gold, ANZ said. Spot gold was up 0.1% at $1,842.11 an ounce.

 
OIL SUMMARY 

Oil fell in early Asian trading, after oil futures extended gains on Wednesday to record their highest settlement in more than seven years. Oanda expects the oil market to remain tight for the foreseeable future amid an improving outlook for oil demand and a tight supply situation. “It looks like the list of supply disruptions keeps growing,” Oanda said, adding that countries that have been affected include Libya and the United Arab Emirates. Meanwhile, ANZ noted that the International Energy Agency estimates that global oil demand is on track to reach pre-pandemic levels this year. First-month WTI and Brent were each down 0.7% at $86.32/bbl and $87.82/bbl, respectively.

 
 
TOP HEADLINES 
China Central Bank Cuts Benchmark Lending Rates 
Nasdaq Falls More Than 1%, Entering Correction Territory 
Oil Prices Close at Highest in More Than Seven Years as Supply Worries Persist 
Japan Exports Marked 10th Month of Growth in December 
Australia's Jobless Rates Falls to Lowest Level Since 2008 
Biden Concedes Covid-19 Frustrations, Warns Russia on Ukraine 
Biden Says Russia Likely to Move Against Ukraine, as Blinken Visits the Region 
North Korea Considers Restarting Long-Range and Nuclear-Weapons Tests 
Supreme Court Rejects Trump's Bid to Block Jan. 6 Records 
Texas Congressman Home Is Searched by FBI 
Democrats Brace for Defeat on Elections Bill, Filibuster Changes 
Trump Organization Falsely Valued Assets, New York Attorney General Says 
United Airlines Says Omicron Variant to Slow Travel Rebound 
Citi Targets Big Oil in Biggest Step Among Major Banks on Climate Change 
Unilever Walks Away From Glaxo Consumer-Healthcare Deal 
Owner of Bankrupt 737 MAX Supplier Challenges Boeing's Legal Release 
Chicago Public Media to Acquire Chicago Sun-Times 
Disney Shakes Up Streaming Management, Forms International Hub 
Instagram Creators Can Charge for Subscriptions Under New Test Service 
Flight Disruptions Ease as 5G Goes Live 
GM Plans to Expand Use of Fuel Cells 
 
 

(END) Dow Jones Newswire

January 19, 2022 10:15 p.m. ET (03:15 GMT)

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