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Asian Markets Mostly Higher After China Rate Cut Decision

asiancommentary dec19 18nov19 lt

Asian stock markets ended mostly higher on Monday as investors awaited further progress on a U.S.-China trade deal, while China's central bank surprised markets by cutting a key interest rate for the first time since 2015.

On Saturday, Chinese state media said that the U.S. and China had "constructive discussions" regarding a phase one trade deal in a high-level phone call.

Chinese shares closed higher after the People's Bank of China unexpectedly lowered the rate on seven-day reverse repurchase agreements by five basis points to 2.50 percent. The move stoked hopes of more stimulus measures to revive the slowing economy.

The benchmark Shanghai Composite Index added 17.86 points or 0.6 percent to finish at 2,909.20. Hong Kong shares closed notably higher, after suffering hefty losses last week. The Hang Seng Index advanced 293.05 points or 1.1 percent to close at 26,619.71.

Japanese stocks also rose in choppy trading as investors awaited further progress on a potential U.S.-China trade deal. Tech stocks were among the major gainers. The benchmark Nikkei 225 Index climbed 113.44 points or 0.5 percent to close at 23,416.76.

In the tech space, Advantest gained 3.7 percent and Tokyo Electron rose 1.8 percent. Market heavyweight SoftBank Group and South Korean internet giant Naver said they have reached a basic agreement on a merger by October 2020 of Z Holdings, formerly known as Yahoo Japan, and the Line chat app.

Shares of Z Holdings rose 1.2 percent. SoftBank Group advanced 1.6 percent, while Fast Retailing added 0.6 percent.

The major exporters closed mixed despite a weaker yen. Sony rose 1.8 percent and Canon added 0.5 percent, while Mitsubishi Electric declined 1 percent and Panasonic lost 0.8 percent.

Among the other major gainers, Eisai Co. rose 4.4 percent, while Recruit Holdings and Hitachi Zosen advanced 2.2 percent each.

On the flip side, DIC Corp. lost 4.1 percent, Nippon Suisan Kaisha dipped 3.4 percent and Toray Industries declined 3.3 percent.

The Australian market closed lower as investors awaited further progress on a potential U.S.-China trade deal. Banking, telecom and utility stocks were among the major losers.

The benchmark S&P/ASX 200 Index fell 26.90 points or 0.4 percent to close at 6,766.80, while the broader All Ordinaries Index lost 27.20 points or 0.4 percent to finish at 6,871.70.

In the banking space, ANZ Banking, Westpac, Commonwealth Bank and National Australia Bank fell in a range of 0.2 percent to 0.8 percent ahead of the release of the minutes of the Reserve Bank of Australia's November meeting on Tuesday.

National Australia Bank is seeking to raise A$1.4 billion through the issue of medium-term notes to bolster its capital ahead of a regulatory deadline.

Among gold miners, Evolution Mining lost 2.3 percent and Newcrest Mining declined 0.9 percent.

Saracen Mineral Holdings has agreed to acquire a 50 percent stake in Kalgoorlie's Super Pit from Canada's Barrick Gold for $750 million. The company's shares were in a trading halt for a capital raising.

Smartgroup Corp. fell 13.7 percent after the salary packaging company said its long-term chief executive would retire in early 2020.

Among the major miners, Rio Tinto advanced 0.9 percent and BHP added 0.2 percent, while Fortescue Metals edged down 0.1 percent.

oOh!Media rejected rumors it has hired Macquarie Capital to help find a private equity firm to back a management buyout and delist from the ASX. Shares of the outdoor advertiser dipped 1.7 percent after emerging from a trading halt.

Appen raised its earnings outlook for the full year and also reiterated a lowered outlook for annual recurring revenue from its Figure Eight machine learning software. The tech company's shares rose 13.4 percent.

Seoul stocks edged lower as investors booked profits. The benchmark Kospi declined 1.49 points or 0.1 percent to settle at 2,160.69. Market heavyweight Samsung Electronics dipped 0.4 percent, while chipmaker SK hynix added 0.4 percent.

New Zealand shares also closed modestly lower, reflecting weakness in the utility and financial sectors. The benchmark NZX 50 Index lost 21.54 points or 0.20 percent to settle at 10,873.16.

Telecommunications company Sky Network Television fell 6.3 percent and electricity retailer Mercury NZ lost 3 percent.

U.S. stocks closed higher on Friday amid renewed optimism about a U.S.-China trade deal following comments from White House officials. Traders also reacted positively to a report from the Commerce Department showing U.S. retail sales rebounded by slightly more than expected in the month of October.

The Dow jumped 0.8 percent, the Nasdaq climbed 0.7 percent and the S&P 500 advanced 0.8 percent.

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