Asian stocks rise after China rate cuts, Japan export gain
Benchmarks in Shanghai Tokyo, Hong Kong and Seoul advanced.
On Wall Street, the benchmark S&P 500 index fell 1% on Wednesday as investors tried to figure out how fast the Federal Reserve will roll back economic stimulus to cool inflation.
The Chinese central bank cut rates on one- and five-year loans after growth in the world's second-largest economy sank to 4% over a year earlier in the latest quarter following a crackdown on surging debt among real estate developers.
“The question remains whether banks will respond by increasing lending,” said Iris Pang of ING in a report. Amid uncertainty about heavily indebted developers, Pang said, “banks will be picky about who they lend to.”
In a news conference, Biden said it was “uncertain” when his administration would be able to lift tariffs on China, imposed by then-President Donald Trump beginning in 2018 in a standoff over trade and technology policies.
He said U.S. Trade Representative Katherine Tai was working on getting to that point, two years after a preliminary trade deal was meant to ease the way toward a resolution of the dispute.
“I’d like to be able to be in a position where I could say they’re meeting the commitments, more of their commitments, and be able to lift some of them,” he said. “But we’re not there yet.”
The Shanghai Composite Index rose 0.3% to 3,568.35 and the Hang Seng in Hong Kong advanced 2.5% to 24,735.47.
The Nikkei 225 in Tokyo gained 1.1% to 27,779.99 after December exports rose 17.5% over a year earlier. Growth in auto exports accelerated to 17.5% from November's 4.1%.
The Kospi in Seoul added 0.5% to 2,855.30 while Sydney's S&P ASX 200 gained less than 0.1% to 7,339.30.
India's Sensex opened down 0.7% at 59,694.09. New Zealand declined while Southeast Asian markets advanced.
On Wall Street, the S&P 500 fell to 4,532.76 after a sell-off in tech stocks. The Dow Jones Industrial Average retreated 1% to 35,028.65.
Apple shed 2.1% and chipmaker Nvidia fell 3.2%. The technology sector of the S&P 500 has fallen more than 8% this year.
The Nasdaq composite, dominated by technology stocks, lost 1.1% to 14,340.26. The index is 10.7% below its Nov. 19 all-time high.
The market “succumbed to renewed fears of inflation/Fed tightening,” Vishnu Varathan of Mizuho Bank said in a report.
Stocks have slid since Fed officials said in mid-December plans to wind down bond purchases and other stimulus that are boosting share prices would be accelerated due to the spike in U.S. inflation to a four-decade high.
Late Tuesday, investors were pricing in a better than 86% probability the Fed will raise short-term rates at its March meeting, according to CME Group. That is up from 47% a month ago.
On Wednesday, Biden called on the Fed to do more to fight inflation.
“Given the strength of our economy, and the pace of recent price increases, it’s important to recalibrate the support that is now necessary,” Biden said at a news conference.
Investors are watching the latest round of corporate earnings for indications inflation might be cutting into profits.
Household and consumer goods company Procter & Gamble rose 3.4% after reporting strong financial results. The company said consumers have been willing to pay higher prices for dish detergent, diapers and other products.
In energy markets, benchmark U.S. crude lost 3 cents to $85.77 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, shed 12 cents to $88.32 per barrel in London.
The dollar edged up to 114.43 yen from Wednesday's 114.25 yen. The euro was unchanged at $1.1351.