Asian markets post gains as China trims key benchmark rate

HONG KONG: Asian markets saw a sustained bump yesterday following China’s decision to lower a key benchmark rate, injecting optimism among traders that it could boost the world’s secondlargest economy from its Covid19 pandemic-battered knees.

Downcast earning reports from retailers this week have heightened uncertainty in the world markets at a time of rising interest rates, surging energy prices, China’s Covid-19 lockdowns and the Ukraine-Russia conflict.

Wall Street took a beating on Thursday, adding to its very bad week as the markets reacted to back-to-back earnings misses from Walmart and Target, which revealed difficulties managing rising costs, as well as weakerthan-expected Chinese economic data.

Yesterday morning, China’s central bank announced that it would lower its five-year loan prime rate — a key interest rate governing how lenders base their mortgage rates — from 4.6 to 4.45 per cent.

The move will help reduce mortgage costs, serving as a boost for demand as China undergoes a property slump and its economy bleeds from stopped ports and factories due to the Covid-19 lockdowns.

It is “without doubt a positive in terms of raising the market’s sentiment”, said Niu Chunbao, fund manager at Shanghai Wanji Asset Management.

Tokyo, Seoul, Singapore and Sydney all saw a sustained one per cent boost, while Hong Kong's Hang Seng led the rally — up by more than three per cent in the afternoon.

The gains filtered through to Europe, where London, Frankfurt and Paris opened higher.

A strong fiscal stimulus “is also expected” from the central government given persistent headwinds to growth, said Chaoping Zhu, a Shanghai-based global market strategist with JP Morgan Asset Management.