Quiet start for Asian markets
Wall Street cruised into the end of the week with the S&P 500, Nasdaq and Dow Jones finishing almost unchanged on Friday. Without any direction from New York, and after a quiet weekend, Asia has been left to its own devices, leading to a mixed start for regional equities.
China’s PBOC announced a 1-year CNY 700 bio medium-term lending facility (MLF) this morning. The amount was larger than expected, with CNY 550 bio maturing this month. Even more important, the rate remained unchanged at 2.95%, implying that there will be no cuts to China’s one and five-year loan prime rates on Thursday. The Chinese central bank seems determined to avoid inflating bubbles in the economy but resisting the urge to follow the rest of the world and flood the financial system with liquidity. In the longer-term, that could well be a prudent policy move, especially with the economy on a path to recovery. The higher MLF total should be a positive factor for Chinese financial stocks today.
Japan’s GDP data for the second quarter was dismal. Preliminary Annualised GDP for Q2 plunged 27.8%, slightly worse than expected. The Preliminary Q2 QoQ data also came in slightly worse than forecast, at -7.80%. Still, the GDP data has not shaken up the financial markets, as soft GDP numbers were expected.
With South Korea and Indonesia on holiday today, the Nikkei 225 has edged 0.60% lower after the worse than expected Japanese GDP figures. The larger than expected PBOC MLF has boosted financials in China, with the Shanghai Composite up 1.25%, and the CSI 300 up 0.85%. Hong Kong, meanwhile, has jumped 1.20%.
Across the rest of Asia, Singapore has edged 0.25% higher, with Kuala Lumpur edging 0.25% lower in directionless trade. Australia has moved lower as banking heavyweights retreat this morning. The ASX 200 is down 0.70%, and the All Ordinaries has fallen 0.80%.
With a lack of market-moving headlines to sink their teeth into, equity markets are likely to continue listlessly ranging for the remainder of the day.