Asian markets mixed after China’s rate cut

ASIAN MARKETS were mixed as an initial burst of euphoria over an interest rate cut by China succumbed to lingering worries over longer-term economic problems.

China’s benchmark, the Shanghai Composite Index, dropped late in the day, losing 1.3 per cent after a volatile series of ups and downs.

That followed a 7.6 per cent slump on Tuesday and an 8.5 per cent loss the day before. But stocks in Japan, South Korea and Australia gained.

Japan’s Nikkei 225 stock index advanced 3.2 per cent to 18,376.83, South Korea’s Kospi gained 2.6 per cent to 1,894.09 and Australia’s S&P ASX/200 rose 0.7 per cent to 5,172.80, helped by buying of resource-related shares. Shares also rose in Taiwan.

But Hong Kong’s Hang Seng index fell 0.5 per cent to 21,305.17, and mainland China’s smaller Shenzhen Composite Index lost 3.1 per cent. Markets were also lower in New Zealand and most of Southeast Asia.

Markets have been zigzagging for weeks on deepening unease over the ramifications of slowing growth in China, the driver of much of the global growth of the past decade.

Nicholas Teo, an analyst at CMC Markets, said: “All of a sud- den, China and the performance of the Chinese markets have now taken the lead in determining daily direction for trading in stocks worldwide.”

The apparent inability of Chinese regulators to calm the markets has spooked investors already fretting over when the US Federal Reserve will raise interest rates.

The Federal Reserve has signalled it could begin raising its key interest rate from near zero for the first time in nearly a decade as early as this year.

But it is not expected to deliver a policy update until it wraps up a meeting of policymakers in midSeptember.

In a last-minute sell-off Tuesday, the Dow Jones industrial dropped 1.3 per cent, extending Wall Street’s losing streak to six days, the longest such stretch in more than three years.