Asia-Pacific markets declined on Monday following significant global developments. U.S. President Joe Biden withdrew from the presidential race, endorsing Vice President Kamala Harris as the Democratic nominee. Concurrently, China’s central bank shocked markets by cutting rates. The short-term 7-day reverse repurchase rate was reduced to 1.7% from 1.8%. Additionally, the one-year and five-year loan prime rates were each trimmed by 10 basis points to 3.35% and 3.85%, respectively—unexpected moves as most economists had anticipated no changes. Furthermore, the People’s Bank of China will lower collateral requirements for its medium-term lending facility starting in July.
A Reuters survey last week indicated that 64% of respondents expected both the one-year and five-year LPR to remain steady. The one-year LPR is a benchmark for corporate loans, while the five-year rate impacts mortgages. Following these announcements, Hong Kong’s Hang Seng index briefly rose before declining by 0.2%, and the mainland Chinese CSI 300 dropped by 0.72%.
Investors are also evaluating the aftermath of a significant global IT outage caused by a glitch in an update from cybersecurity firm CrowdStrike, which affected around 8.5 million Windows devices. Microsoft’s shares dipped 11% due to the issue.
This week, crucial GDP data from South Korea and the U.S. will be released on Thursday, with factory activity data from various regions expected. Additionally, inflation figures from the U.S. and Singapore are due on Friday and Tuesday, respectively.
Japan’s Nikkei 225 fell by 1%, dipping below 40,000 for the first time in three weeks, while the broader Topix declined by 0.9%. South Korea’s Kospi decreased by 1.4%, and the Kosdaq saw a 2.2% loss. Australia’s S&P/ASX 200 dropped by 0.76%.
In the U.S., all major Wall Street indexes retreated on Friday, capping a week marked by a rotation from mega-cap stocks to smaller names. The S&P 500 fell by 0.71%, the tech-heavy Nasdaq Composite slid by 0.81%, and the Dow Jones Industrial Average declined by 377.49 points, or 0.93%, closing at 40,287.53 points.
— CNBC’s Alex Harring and Jesse Pound contributed to this report.
Original Story https://www.cnbc.com/2024/07/22/asia-stock-markets-biden-drops-out-china-lpr.html
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