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Indian Morning Briefing: Asian Markets Higher; China PBOC Cuts Five-Year Benchmark Lending Rate

GLOBAL MARKETS 
DJIA         31253.13   -236.94   -0.75% 
Nasdaq       11388.50    -29.66   -0.26% 
S&P 500       3900.79    -22.89   -0.58% 
FTSE 100      7302.74   -135.35   -1.82% 
Nikkei Stock 26701.07    298.23    1.13% 
Hang Seng    20455.41    334.73    1.66% 
Kospi         2632.12     39.78    1.53% 
SGX Nifty*   16008.50    223.5     1.42% 
*May contract 
 
USD/JPY  128.09-10   +0.22% 
Range    128.22   127.67 
EUR/USD  1.0564-67   -0.19% 
Range    1.0590   1.0557 
 
CBOT Wheat July $12.004 per bushel 
Spot Gold    $1,842.32/oz   0.1% 
Nymex Crude (NY) $111.36   $1.77 
 
 
U.S. STOCKS 

U.S. stocks and bond yields fell, with the S&P 500 flirting with a bear market, in a continuing selloff driven by investor fears that the economy could be pitched into a recession.

The major indexes dipped early in Thursday's session, a day after tumbling 4%, before recovering ground. They ultimately finished lower, with all three on track for weekly losses of at least 2.9%. Concerns about consumer spending, which helped lift the market out of pandemic lows, have weighed on stocks and bond yields.

The S&P 500 lost 22.89 points, or 0.6%, to 3900.79, coming close to bear-market territory-market shorthand for a 20% fall from a recent high. The Dow Jones Industrial Average fell 236.94 points, or 0.8%, to 31253.13. Both indexes closed at their lowest level since March 2021.

The Nasdaq Composite Index, which entered bear-market territory earlier this year, retreated 29.66 points, or 0.3%, to 11388.50.

 
 
ASIAN STOCKS 

Japanese shares were slightly higher, led by gains in electronics stocks following their recent losses amid concerns about supply-chain disruptions and higher costs of materials. Hoya Corp. added 1.5% and Sysmex Corp. was 1.0% higher. Earnings from insurers were in focus as the season comes to an end. Tokio Marine Holdings and MS&AD Insurance Group Holdings are due to announce their results later in the day. The Nikkei Stock Average was 0.2% higher at 26455.69.

South Korea's Kospi rose 0.9% to 2614.51 in early trade, led by chemical and tech stocks. Investor appetite for riskier assets was returning due to China's easing of Covid-19 lockdowns and hopes for the conflict in Ukraine to be resolved eventually, NH Futures analyst S.H. Kim said in a market commentary. USD/KRW was 0.8% lower at 1,267.00 on renewed risk-on sentiment. Index heavyweight and tech giant Samsung Electronics was 0.5% higher. Memory-chip maker SK Hynix was up 0.9%. Battery maker LG Energy Solution rose 2.2% and its parent LG Chem climbed 3.6%. Saudi Aramco-controlled S-Oil was 1.9% lower after a fire overnight at its Ulsan plant.

Hong Kong's Hang Seng Index rose 2.0% to 20517.20, tracking gains in regional equity markets and U.S. stock futures. The positive moves in futures together with a potential easing of market fears, as shown by the overnight slide in the CBOE Volatility Index, may allow Asian markets to take a breather, said IG market strategist Yeap Jun Rong in an email. Among the HSI's best performers, BYD Co. climbed 3.9%, Sunny Optical Technology rose 3.8% and Xiaomi Corp. was up 3.6%. The Hang Seng TECH Index advanced 3.0% to 4214.18.

Chinese stocks were higher in early trade amid news that the PBOC cut the five-year loan prime rate to 4.45% from 4.6%. The Shanghai Composite Index rose 0.5% at 3112.55, the Shenzhen Composite Index was 0.7% higher at 1967.12 and the ChiNext Price Index gained 0.9% to 2399.05. Auto stocks were higher, with BYD Co. rising 2.1% and SAIC Motor gaining 1.0%. China-Canada relations may be in focus, after Canada said Thursday it will ban equipment made by Huawei and ZTE from being used in its next-generation 5G mobile network. Reports that China was in talks with Russia to buy discounted Russian oil to replenish its strategic reserves would also be closely watched, as it could curb the impact of Europe's efforts to limit Russian oil exports.

FOREX 

Most Asian currencies weakened against the USD in the Asian morning session amid rising Treasury yields, which increase the appeal of USD-denominated fixed-income assets. However, Asian currencies would benefit from any easing in concerns over China's Covid-19 outbreak and lockdowns, said SPI Asset Management managing partner Stephen Innes in an email. China was relaxing lockdowns and mobility restrictions in Shanghai and considering more widespread easing, Innes noted. USD/KRW rose 0.6% to 1,271.05 and USD/SGD edged 0.1% higher to 1.3818, while AUD/USD fell 0.4% to 0.7018.

METALS 

Gold prices edged higher in the early Asian session amid safe-haven demand. Gold was acting like a safe-haven again as recession fears are sparking massive demand for Treasurys, which was sending both yields and USD lower, said Oanda senior market analyst Edward Moya in an email. Right now, investors were seeking safety and Treasurys and gold should both outperform in the short-term, the analyst added. Spot gold was 0.1% higher at $1,842.32/oz.

OIL SUMMARY 

Oil declined in the early-morning Asian session on prospects of Russian supply to China. China was reportedly in talks with Russia to replenish its strategic crude oil reserves, taking advantage of discounted Russian oil, Taylor Nugent, economist for markets at NAB, said in a research report. This would be a sign of strengthening energy ties between them and could dampen the impact of European efforts to limit Russian oil exports, the economist added. Front-month WTI crude oil futures were down 1.1% at $110.98/bbl; front-month Brent crude oil futures were down 0.9% at $111.06/bbl.

 
 
TOP HEADLINES 
 
China PBOC Cuts Five-Year Benchmark Lending Rate 
Gas Prices Hit New Highs Again With All 50 States Above $4 a Gallon 
Russia Rejects Pleas to Permit Grain Shipments From Ukraine 
Europe's Gas Buyers Defuse Standoff With Kremlin Over Ruble Payments 
Biden Commits U.S. Support to Finland, Sweden Joining NATO 
Senate Passes $40 Billion Aid Package for Ukraine 
U.K. Consumer Confidence Hits Five-Decade Low on Inflation Worries 
Canada to Ban 5G Equipment From Huawei, ZTE 
Billionaire Likely to Sell AGL Stake if Demerger Goes Through 
NIO Inc. Class-A Shares Rise on Singapore Debut 
Some Fed Officials Face Heat for Wading Into Hot-Button Issues 
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Crypto Exchange FTX Expands Into Stock Trading 
GOP-Led Legislation Would Force Breakup of Google's Ad Business 
Shares of Ross Stores Fall 17% After Sales Decline 
Boeing's Starliner Spacecraft Launches Toward Space Station in Do-Over Mission 
Twitter Moves to Limit Spread of Misinformation in Crises 
Applied Materials Profit Climbs but Supply-Chain Issues Persist 
Nevada Gambling Regulators Approve Barry Diller to Work in Casino Business 
Moderna Ready to Ship Covid-19 Shots for Young Kids by June 
CDC Recommends Covid-19 Boosters for 5- to 11-Year-Olds 
Alaska Permanent Fund to Slow Its Private-Equity Commitment Pace 
Baby-Formula Shortage Leaves Families Desperate, Prompting WIC Program Revamp 
 
 

(END) Dow Jones Newswires

May 19, 2022 23:15 ET (03:15 GMT)

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