Asian markets mixed after China cuts loan prime rate


Asian markets were mixed in early trading Thursday after China’s central bank cut its loan prime rate, as expected.

The People’s Bank of China cut its benchmark one-year loan prime rate by 10 basis points, and the five-year loan prime rate by 5 basis points. That came days after central bank officials cut the one-year medium-term lending rate to 3.15% from 3.25% and conducted additional monetary stimulus.

But some found the PBoC’s actions underwhelming. “Not nearly enough,” wrote Stephen Innes, chief market strategist at AxiTrader, in a note. “Although the LPR came in on expectation, the market was hoping for 4 % on the one-year LPR while pining for a nudge lower five years. The PBoC needs to exceed the market expectations, not hit them in this environment.”

Hong Kong’s Hang Seng Index

HSI, -0.71%

  fell 0.8%, while the Shanghai Composite

SHCOMP, +0.90%

  rose 0.5% and the Shenzhen Composite

399106, +1.46%

  gained 1%. Japan’s Nikkei

NIK, +0.32%

  advanced 0.3%, while South Korea’s Kospi

180721, -0.47%

  sank 0.5%. Stocks ticked up in Indonesia

JAKIDX, +0.11%

 , but benchmark indexes in Taiwan

Y9999, -0.29%

  and Singapore

STI, -0.67%

  declined. Australia’s S&P/ASX 200

XJO, +0.25%

  gained 0.2%.

Worries remain about the impact the coronavirus outbreak will have on the global economy, and especially China’s. New cases in China slowed again Thursday, with just 394 new cases from the previous day. Still, China has reported 74,576 total cases, with 2,118 deaths, according to the Associated Press.

On Wall Street on Wednesday, the S&P 500 and Nasdaq finished at all-time highs as investors were encouraged by comments from the Federal Reserve and measures China says it has taken to help coronavirus-stricken businesses.

The Dow Jones Industrial Average

DJIA, +0.40%

  advanced 115.84 points, or 0.4%, to 29,348.03. The S&P 500

SPX, +0.47%

 rose 15.86 points, or 0.5%, to end at 3,386.15, for another record finish. The Nasdaq Composite

COMP, +0.87%

  added 84.44 points, or 0.9%, to end the session at a record at 9,817.18, its second straight all-time closing high.

West Texas Intermediate crude for March delivery

CLH20, +0.47%

  added 18 cents to $53.47 a barrel in electronic trading on the New York Mercantile Exchange. April Brent crude, the global benchmark, gained 7 cents to $59.19 a barrel.

The dollar

USDJPY, +0.03%

  edged up to 111.40 Japanese yen.



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U.S. meeting on Huawei, China policy still on for Thursday despite Trump tweets: sources By Reuters



WASHINGTON (Reuters) – A meeting of U.S. government officials to discuss further curbs on exports to Huawei and China is still on for Thursday, two sources said, despite a pushback from President Donald Trump against stricter limits on shipments of U.S. products overseas.

The deputy-level meeting was called to discuss issues including possible new restrictions on sales of chips made abroad to China’s blacklisted Huawei Technologies and on sales of airplane components to a Chinese aircraft maker.

Policymakers have been sharply divided ahead of a cabinet-level meeting scheduled for Feb. 28, with some officials favoring a tough line on Huawei and China while others are more focused on trade.

Doubts swirled about whether the meetings would move forward after Trump on Tuesday blasted U.S. proposals that would prevent companies from supplying jet engines and other components to China’s aviation industry.

In a series of tweets and comments to reporters, Trump said national security concerns, often cited as the reason for U.S. curbs on Huawei, should not be used as an excuse to make it difficult for foreign countries to buy U.S. products.

The president’s comments came after weekend reports by Reuters and other news media that the government was considering whether to stop General Electric Co (N:) from further supplying engines for a new Chinese passenger jet.

The potential restriction on the engine sales – possibly along with limits on other components for Chinese commercial aircraft such as flight control systems made by Honeywell International Inc (N:) – would have been the latest move in the battle between the world’s two largest economies over trade and technology.

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New coronavirus cases in China fall for second day as death toll passes 2,000 By Reuters



By Ryan Woo

BEIJING (Reuters) – The death toll from the new coronavirus in mainland China passed 2,000 on Wednesday although the number of new cases fell for a second straight day, as authorities tightened already severe containment measures in the worst-hit city of Wuhan.

China’s National Health Commission reported 1,749 new confirmed cases of coronavirus infections, the lowest daily rise since Jan. 29, while Hubei province – the epicenter of the outbreak – reported the lowest number of new infections since Feb. 11.

The latest figures bring the total number of cases in China to over 74,000 with 2,004 deaths, three quarters of which have occurred in the Hubei provincial capital of Wuhan. The city of 11 million people, where the virus first appeared last year, is under virtual lockdown.

Chinese officials have said the apparent slowdown in infection rates is evidence the flu-like virus is being brought under control but global health officials say it is still to early to predict how the epidemic will play out.

The head of a leading hospital in Wuhan, where the virus is believed to have originated, died of the disease on Tuesday, the seventh health worker to have succumbed to the disease, known as COVID-19.

Chinese state media reported that Hubei would adopt more forceful measures to find patients with fever to help contain the epidemic, on top of steps already taken to isolate the province.

The province will check records of all fever patients who have visited doctors since Jan. 20, and people who have bought over-the-counter cough and fever medications at both brick-and-mortar and online drug stores, Xinhua reported, citing a notice by the province’s epidemic control headquarters.

The World Health Organization’s (WHO) emergencies program chief, Mike Ryan, said China had success with “putting out the fire” first in Hubei and ensuring that people returning to Beijing from the Lunar New Year holiday were monitored.

“Right now, the strategic and tactical approach in China is the correct one,” Ryan said.

The number of new cases in mainland China excluding Hubei has now fallen for 15 straight days. The number of new infections ex-Hubei totaled 56 on Feb. 18, down from a peak of 890 on Feb 3.

The biggest cluster of infections outside of China is on a cruise ship in quarantine off Japan, where more than 540 out of 3,700 passengers and crew have tested positive.

Around 500 passengers were set to disembark on Wednesday, although those sharing a room with people testing positive would have to stay on board longer, Japanese media and officials said. Many of those infected have already been transferred to hospitals. About half the passengers are Japanese.

A jet brought seven people from the ship to South Korea on Wednesday and Australia is expected to evacuate more than 200 of its citizens from the ship later in the day.

The United States evacuated about 400 citizens from the Diamond Princess on Sunday, while Britain, Canada, Hong Kong, Italy and Taiwan have plans to repatriate passengers.

Outside China, there have been 827 cases of the disease, and five deaths, according to a Reuters count based on official statements.

GLOBAL REPERCUSSIONS

Despite global concerns about the economic impact of the disease, China’s ambassador to the European Union said on Tuesday this would be “limited, short-term and manageable” and that Beijing had enough resources to step in if needed.

Chinese state television quoted President Xi Jinping as saying China could still meet its economic growth target for 2020 despite the epidemic.

In a vote of confidence that the virus would not inflict lasting long-term damage on China’s economy, a source said a Chinese fund attracted about 120 billion yuan ($17.1 billion) of subscriptions on Tuesday, 20 times the target.

The mutual fund, which can invest up to 95% of assets in stocks, aimed to raise 6 billion yuan, but the marketing campaign was cut short by the outpouring of interest.

Even so, the short-term impacts are playing havoc with trade and business around the world.

Britain’s biggest carmaker, Jaguar Land Rover, has flown Chinese parts in suitcases to Britain to maintain production and could run out after two weeks because of the coronavirus.

South Korean President Moon Jae-in said the economy there was in an emergency situation and required stimulus as the epidemic had disrupted demand for South Korean goods such as cars, computer chips and smartphones.

Data this week from Japan and Singapore indicated those economies were on the brink of recession.





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Nasdaq ekes out record finish, other stock indexes slump as coronavirus takes toll on Apple sales


The Nasdaq Composite index eked out a record finish Tuesday, even though other major stock benchmarks fell after Apple Inc. said its second-quarter earnings would take a hit from the viral outbreak in China, reigniting fears that the disease may disrupt manufacturing supply chains and have broad implications for the global economy and financial markets.

How did benchmarks perform?

The Dow Jones Industrial Average

DJIA, -0.56%

 shed 165.89 points, or 0.6%, to settle at 29,232.10, while the S&P 500

SPX, -0.29%

 lost 9.87 points or 0.3% to close at 3,370.29.

However, the Nasdaq Composite Index

COMP, +0.02%

 gained 1.57 points, or less than 0.1%, to finish at a record 9,732.74, after flipping positive only in afternoon trade. Most of the Dow’s decline was attributed to downward pressure in shares of Apple and Dow Inc.

DOW, -1.83%,

according to Automated Insights. U.S. financial markets were closed Monday for the Presidents Day holiday.

The Dow on Friday booked a weekly gain of 1%, the S&P 500 finished the period with a gain 1.5%, while the Nasdaq Composite Index returned 2.2% for the week.

What drove the market?

Apple

AAPL, -1.83%

said Monday it won’t meet its second-quarter financial guidance because the coronavirus outbreak that originated in Hubei province in China last year is affecting its suppliers’ production. “The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” the iPhone maker said in a statement.

Apple said revenue in the current quarter won’t reach its target range of between $63 billion and $67 billion due to the impact of the infectious disease.

Read: Apple’s coronavirus warning wasn’t a total surprise, but magnitude rattles Wall Street

The COVID-19 epidemic has sickened more than 73,000 people and claimed nearly 1,900 lives thus far.

U.S. markets, which have been primarily focused on corporate earnings and otherwise healthy economic data, had effectively shaken off worries fueled by the disease, but some strategists warn investors may be too dismissive.

“We haven’t really heard of any peak levels, that’s what’s beginning to sink into investors’ minds,” Peter Cardillo, chief market strategist at Spartan Capital Securities in New York, said referring to the rising number of people infected with the coronavirus.

“Also, we have gold prices soaring today,” he told MarketWatch, adding that precious metal could ascend even higher than $1,600 an ounce. “There are a lot of uncertainties and those uncertainties are weighing on the market.”

Read: Why gold prices topped $1,600 and may soon hit a more than 7-year high

“You’re trying to take the information from Apple and extrapolate that to the holdings you actually own,” Robert Pavlik, chief investment strategist at SlateStone Wealth told MarketWatch. “Obviously, there was going to be some impacts,” he said, pointing to disrupted supply chains and weaker demand. “But you just don’t know if the impacts are going to be temporary or if you’re going to lose those orders all together.”

Still, in the year to date, the Dow was up 2.4%, the S&P 500 gained 4.3%, and the Nasdaq ended 8.5% higher for the period.

See: What Apple, Walmart and other U.S. companies are saying about the coronavirus

What’s more, the expected hit to U.S. manufacturing from the coronavirus has not been felt yet: a reading on manufacturing conditions in the New York area surged to a nine-month high in February, the Federal Reserve Bank of New York said Tuesday. The forward-looking new orders component of the index hit its highest in a year.

A closely watched reading about home builder confidence was also strong in February. The National Association of Home Builders’ monthly index hit 74, down one tick from January, but still marking the strongest start to a year on record. The sentiment tracker is considered an early read on the pace of new residential construction.

But the outlook for the embattled energy sector looks tougher. Dallas Federal Reserve President Robert Kaplan said Tuesday he expects this year to see “belt-tightening” and restructurings for companies in the U.S. oil and gas sector as domestic production growth is expected to decline.

Which stocks were in focus?
How did other assets perform?

The price of a barrel of West Texas Intermediate crude for March delivery

CLH20, +0.25%

settled unchanged at $52.05 a barrel on the New York Mercantile Exchange, after gaining 3% last week.

Gold for April delivery

GCJ20, +1.15%

rose 1.1% to settle at $1,603.60 an ounce, its highest finish since March 2013, as investors flocked to haven assets.

The U.S. dollar

DXY, +0.47%

was 0.4% higher against a basket of rival currencies at 99.40.

The benchmark U.S. 10-year Treasury note

TMUBMUSD10Y, -1.72%

shed 3.2 basis points to 1.555%. The 30-year bond was lower at 2.006%, after briefly dipping below the key psychological threshold. Bond yields fall when prices rise.

In Europe, the Stoxx Europe 600

SXXP, -0.38%

slipped 0.4%, while the FTSE 100

UKX, -0.69%

finished 0.7% lower.

In Asia overnight, the China CSI 300

000300, -0.49%

 ended 0.5% lower to close at 4.057.51, the Shanghai Composite

SHCOMP, +0.05%

 edged up less than 0.1% at 2,984.97, and the Hang Seng Index

HSI, -1.54%

closed 1.5% lower at 27,530.20. The Nikkei 225

NIK, -1.40%

lost 1.4% to 23,193.80.



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Oil prices slide as investors fret about


Oil futures traded sharply lower Tuesday as concerns about the coronavirus and its impact on demand resurfaced, fueling a broader aversion to assets considered risky on Wall Street. Growing doubts that a group of global crude producers, particularly Russia, are inclined to reduce output further to stabilize prices also weighed on prices.

West Texas Intermediate crude for March delivery

CLH20, -1.86%

 lost $1.11, or 2.1%, to $50.94 a barrel on the New York Mercantile Exchange, while April Brent crude

BRNJ20, -2.05%

 fell $1.33, or 2.3%, to $56.34 a barrel on ICE Futures Europe.

“The risk-off tone was also driving oil on Tuesday, with WTI and Brent crude prices off by between 1.5%-1.8% amid fading hopes that OPEC and its allies will be able to agree to emergency production cuts to counter the deteriorating demand outlook,” wrote Raffi Boyadjian, senior investment analyst at XM in a Tuesday research note.

The decline comes after both grades last week booked their first weekly gains in six weeks, with WTI notching a 3.4% weekly rise, while Brent, the global benchmark, saw a 5.2% gain over the period, according to Dow Jones Market Data.

Crude oil traders have been waiting for signs that members of the Organization of the Petroleum Exporting Countries and other major producers like Russia — a group known as OPEC+ — will move forward a planned March meeting to sometime this month. However, Reuters, citing unnamed sources, reported that there are no indications that such a gathering will take place, heightening fears that the there isn’t sufficient will to dial back production further, in line with an advisory panel’s recommendation to shrink output by a further 600,000 barrels per day.

Russia, one of the largest exporters of crude, has been reluctant to reduce oil output further. OPEC+, is currently under an agreement to cut oil output by 1.7 million barrels per day, which ends at the end of March.

The slump in oil prices comes as the outbreak of COVID-19, the infection that reportedly originated in Wuhan, China last year, has sickened more than 72,000 people and killed more than 1,800, according to the most recent data out of China.

Commodity investors are concerned about the spread of the disease because it is expected to harm demand from China, the biggest importer of crude in the world. Infections elsewhere in the world could also harm global uptake of fossil fuels, producing a drag on prices.

Indeed, the International Energy Agency slashed its 2020 oil demand-growth forecasts by 365,000 barrels a day, a reduction of 30% to its previous forecast made in January, citing the impact of the outbreak of the novel coronavirus.

In other energy trading, March gasoline

RBH20, -0.20%

 was down 0.4% to $1.578 a gallon, after gaining 3.9% for the week, while March heating oil

HOH20, -2.11%

 lost 2.1% to $1.662 a gallon, following a 3.3% advance last week.

March natural gas

NGH20, +5.72%

 soared 5.9% to $1.945 per million British thermal units. The commodity suffered a loss of 1.1% for the week, and hit its lowest trade since March 2016.



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