FILE PHOTO – Investor stands in front of an electronic board showing information about shares in a brokerage house in Shanghai, China, August 24, 2015. REUTERS / Aly Song
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SHANGHAI, May 20 (Reuters) – Asian stocks jumped early on Friday after China cut key lending to support a slowing economy, but global stocks remained set for the longest weekly loss in the series. amid investor concerns about slow growth.
China cut its five-year key interest rate (LPR) by 15 basis points on Friday morning, a sharper cut than expected as authorities seek to ease the economic slowdown, although it left the one-year LPR unchanged. The five-year interest rate affects the pricing of mortgages. Read more
Most respondents to a Reuters poll expected a slight reduction of 5 basis points on both rates. Read more
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MSCI’s broadest Asia-Pacific equity index outside Japan (.MIAPJ0000PUS) quickly built on early earnings after declining, most recently by 1.4%.
China’s blue chips were 1.1% higher at the beginning of trading, and Hong Kong’s Hang Seng (.HSI) index jumped more than 2%, while Australian stocks (.AXJO) rose 1.3%. In Tokyo, the Nikkei stock index (.N225) rose 1%.
“While it will certainly not be enough to reverse the second wind of growth in the second quarter, (cutting) is moving in the right direction, so markets can respond to expectations of stronger easing ahead,” said Carlos Casanova, senior. economist for Asia at Union Bancaire Privee. in Hong Kong.
Despite the rise in Asian stocks, the MSCI World Price Index for All Countries (.MIWD00000PUS) remains at the forefront for its seventh consecutive week in the red, the longest such period since its inception in 2001. It will also be the longest including data from back-testing continued until January 1988.
Concerns about the impact of broken supply chains on inflation and growth have prompted investors to drop stocks, with Cisco Systems Inc (CSCO.O) falling to an 18-month low on Thursday after warning of a persistent shortage of components, citing the impact of Chinese COVID Lock. Read more
On Friday, China’s financial center in Shanghai announced three new cases of COVID-19 outside quarantine zones, throwing a wrench in the city’s hopes of breaking out of its weeks-long blockade.
“The focus of (Chinese) officials has been to devise mitigation policies to mitigate the impact of COVID suppression … The problem is that such mitigation policies will not have a real impact as long as the COVID suppression policy is strictly enforced,” said Christopher Wood, global equity manager at Jefferies.
Profits in Asia came after the late Wall Street rally subsided, leaving the Dow Jones Industrial Average (.DJI) down 0.75%, the S&P 500 (.SPX) 0.58% lower and the Nasdaq Composite (.IXIC) ) with 0.26%.
Reflecting the change in equity risk appetite, US government bond yields rose after China’s LPR fell.
The 10-year US yield was last at 2.8677%, up from a close of 2.855% on Thursday, while the two-year yield rose to 2.6364% compared to a US close of 2.611%.
In foreign exchange markets, the dollar index was 0.08% higher at 102.99 as the yen fell against the dollar. The last dollar rose 0.23% against the Japanese currency, while the euro fell 0.14% to $ 1.0571.
The Chinese land yuan weakened by a quarter to 6.726 to the dollar, while the more freely traded offshore yuan weakened to 6.74 to the dollar.
Oil prices remained lower due to concerns about economic growth, due to reduced losses after China’s statement on LPR. Last, Brent crude was 0.37 percent lower at $ 111.63 a barrel, and US West Texas Intermediate crude was 0.19 percent lower at $ 112 a barrel.
Spot gold was lower, falling 0.2% to $ 1838 an ounce.
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Report by Andrew Galbraith; Edited by Lincoln Feast
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