China holds interest rates; real estate prices

SINGAPORE — Shares in Asia-Pacific mostly fell on Friday as China failed to cut interest rates despite analysts’ expectations for more stimulus.

Investor attention has turned to mainland Chinese stocks, with many important markets in the region closed for the Good Friday holiday.

Mainland stocks have been under pressure for much of the past week as China faces the worst Covid outbreak since the pandemic began and Shanghai remains under lockdown.

They rebounded a bit on Thursday as hopes of some easing from the government lifted, but on Friday in early trade, mainland stocks were in negative territory.

The Shanghai composite was down 0.62% and the Shenzhen component was down 1.08%.

This underscores the central bank’s reluctance to aggressively ease policy. But we think he will have no choice but to do more before long.

Julian Evans Pritchard

Senior China Economist, Capital Economics

“Chinese stocks remained under pressure from concerns over covid-related lockdowns,” said Shane Oliver, head of investment strategy and chief economist at Australian financial services firm AMP.

“China continues to have problems dealing with the Omicron wave, resulting in lockdowns under its ‘zero covid’ policy (although it is considering relaxing some of its approach) threatening Chinese growth and contributing to further supply disruptions around the world,” he said Friday morning. Remark.

Although investors were hoping for more policy support to come, China on Friday refrained from lowering rates. The People’s Bank of China left medium-term rates unchanged despite expectations of further stimulus given the Covid-induced slowdown.

“This is somewhat surprising given the deep economic downturn and recent calls from Chinese leaders for monetary support. This underscores the central bank’s reluctance to aggressively ease policy. no choice but to do more before long,” Julian said. Evans-Pritchard, senior China economist at Capital Economics.

Hong Kong markets are closed for the Good Friday holiday, as are Australia, Singapore, India and New Zealand.

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In economic data, China released house price data, which showed the country’s new home prices stagnated for a second consecutive month in March, according to Reuters. They were up 1.5% from a year ago, the slowest pace since November 2015.

In other markets, Japan’s Nikkei 225 fell 0.26%, while the Topix fell 0.64%. Tech stocks pared earlier losses, with SoftBank Group down more than 1% and Sony down 2.65%.

The South Korean Kospi also fell around 0.58%.

We believe it is possible that the 10-year Treasury yield will rise further over the next twelve months or so, with a peak not expected until the middle of next year.

Franziska Palmas

Market Economist, Capital Economics

U.S. stocks fell on Thursday, capping a losing week as investors digested mixed earnings results from big banks and rising inflation.

The S&P 500 fell 1.21% to 4,392.59, while the Nasdaq Composite lost 2.14% to 13,351.08. The Dow Jones Industrial Average fell 113.36 points, or 0.33%, to 34,451.23.

Inflation was the main concern this week. Yields on US Treasuries climbed as inflation reports showed sharply rising prices, fueling expectations of more aggressive Fed tightening. On Thursday, the benchmark 10-year US Treasury yield hit multi-year highs, climbing 13 basis points to 2.8%.

“We think there is a possibility that the 10-year Treasury yield will rise further over the next twelve months or so, with a peak not expected until the middle of next year,” said economist Franziska Palmas. markets at Capital Economics, in a note.

She cited analysis of the 10-year Treasury yield over eight major cycles of Fed tightening since the 1970s, suggesting the current selloff “may have lasted some more.”

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 100.478, regaining strength to rally above the 100 mark.

The Japanese yen was trading at 126.35 to the dollar, continuing to weaken. The Australian dollar continued to fall and was trading at $0.7403.

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