Asia markets mixed as China cuts 1-year loan prime rate, but leaves 5-year rate unchanged – CNBC

Thailand’s economy expanded 1.8% year-on-year in the second quarter, sharply lower than the 3.1% expected by economists polled by Reuters and the 2.6% in the first quarter.

Thailand’s national economic and social development council explained that 1.8% expansion was due to “high expansion of households expenditure, increased production of the service sector, and a deceleration of the inflation rate,” although it did not give a reason as to the deceleration in growth.

On a seasonally adjusted quarter on quarter basis, GDP climbed by just 0.2% in the second quarter, lower than the 1.2% expected in the Reuters poll.

— Lim Hui Jie

Chinese financial regulators at a central and regional government level held a video conference Friday to discuss the resolution of financial risks, according to a readout Sunday from the People’s Bank of China.

The meeting called for coordinating financial support to resolve local debt risks, and adjusting policy for real estate loans.

It also reflected a gathering of a new set of financial policymakers in China’s overhaul of its regulatory system this year.

Read more about the meeting here.

—Evelyn Cheng

Chinese real estate company Country Garden Holdings is set to be removed from Hong Kong’s Hang Seng Index after the benchmark’s latest quarterly review. In its place, pharmaceutical firm Sinopharm will be added.

Country Garden Services Holdings, which is a property management firm and Country Garden affiliate, will also be removed from the Hang Seng China Enterprises Index. It will be replaced by online travel agency Trip.com.

Shares of Country Garden have plunged over 70% from the start of the year and hit record lows after the company failed to meet bond coupon payments, issued a profit warning and suspended trading in 11 of its onshore bonds.

The People’s Bank of China cut its one-year loan prime rate by 10 basis points to 3.45%, but held the five-year LPR at 4.2%.

This is in contrast with expectations from economists polled by Reuters, which expected both rates to be cut.

The move also comes after the PBOC cut its short-term loan rates, as well as its medium-term lending facility rates last week.

The one-year MLF rate was lowered from 2.65% to 2.5%, while the 7-day reverse repurchase rate was cut from 1.9% to 1.8%.

— Lim Hui Jie

Despite ongoing economic crises around the world, global stock markets have remained resilient so far this year. However, one veteran strategist warns that this disconnect between geopolitics and equities won’t last forever.

David Roche, president and global strategist at Independent Strategy, said equity markets were still relatively buoyant “because people are stupid” and overly complacent.

Roche also named the asset he would prefer to own, amid the rising risks in a high interest rate environment.

CNBC Pro subscribers can read more here.

— Ganesh Rao

New Zealand’s trade balance fell into negative territory in July, recording a deficit of 1.1 billion New Zealand dollars ($652.67 million) compared with the NZ$9 million surplus in June.

This is the first time that the country has posted a deficit since March, when it recorded a NZ$1.27 billion deficit.

Exports fell 14% from a year ago to NZ$5.5 billion, while imports fell 16% year-on-year to NZ$6.6 billion.

— Lim Hui Jie

Analysts at Bank of America screened for “triple momentum” stocks based on their momentum in three areas: earnings, price and positive news.

Earnings momentum refers to the change in consensus earnings per share estimates for each stock over three months, according to BofA. Price momentum concerns market sentiment, while news momentum refers to media coverage and corporate news releases.

CNBC Pro subscribers can read more here.

— Lucy Handley

Only a few China funds tracked by Morningstar have outperformed the MSCI China Index this year.

Those funds have tended to have a value-style tilt, versus growth.

“Concerns over China’s economic growth and the geopolitics in the last year or so has also led to a [preference] for Chinese companies that can deliver stable cash flows,” said Claire Liang, Morningstar’s senior manager research analyst.

CNBC Pro subscribers can read more here.

—Evelyn Cheng

As expected, Federal Reserve Chairman Jerome Powell will be delivering an address at the central bank’s symposium in Jackson Hole, Wyo., next week.

The Fed announced that Powell will speak Friday, Aug. 25 at 10:05 a.m. ET. He will deliver a speech, but there will be no question-and-answer session afterwards.

Running from Thursday to Saturday, the topic of this year’s conference will be “Structural Shifts in the Global Economy.” In the past, Fed chairs have used the event to lay out policy agendas. In 2022, Powell affirmed the Fed’s commitment to fighting inflation, warning that there would be “some pain” ahead.

—Jeff Cox

Competition in the electric vehicle industry is getting fiercer. Price declines have been accelerating since the start of the year, the market is growing and government subsidies have shrunk — putting EV companies’ business models to the test, Goldman Sachs said.

The investment bank said in an Aug. 10 note that it sees two groups of companies “prevailing in an era of intense competition,” and named six such stocks.

CNBC Pro subscribers can read more here.

— Weizhen Tan

The energy sector outperformed the S&P 500 on Friday, inching up 0.8% compared to the broad market index’s 0.2% decline. Devon Energy, Marathon Oil and Occidental Petroleum led the sector gains, rising 1.5% and more for the day.

Consumer staples, industrials, utilities and real estate also traded up between 0.1% and 0.2%. Meanwhile, materials stocks traded near the flatline.

Communication services was the most-declining sector, falling almost 1% , with tech giants Alphabet and Meta 2% declines pulling down the group.

To be sure, all the S&P 500 sectors are down for the week. The consumer discretionary sector has tumbled 4.2% week to date. Tesla shares led losses with a 10.6% decline, with Wynn Resorts and Carnival also falling 9%.

— Hakyung Kim

If Tesla remains down through Friday’s close, it will mark the sixth straight session of losses for the electric vehicle maker’s stock — a length not seen this year.

Tesla last saw a losing streak of that length in December, when the stock tumbled for seven days straight.

The 2023 losing streak began Aug. 11, when shares ended 1.1% lower. Each day has brought a substantial leg down, with shares losing no less than 1% each session since.

Shares have fallen more than 19% so far in August. But it has still been a strong year even accounting for the recent pullback, with shares up more than 75% year to date.

— Alex Harring

With just hours left in the trading week, the Dow is on pace to end down more than 2%. Just two of the thirty stocks have been able to avoid the slide.

Cisco, the best performer in the index this week, has added about 2.5%. On Wednesday, the networking company reported earnings that beat expectations for the fiscal fourth quarter on both lines, while also issuing mostly solid guidance for the current quarter and full fiscal year.

Pharmaceutical stock Merck & Co. was the only other stock able to buck the leg down. The stock is poised to finish the week around 1% higher.

Walgreens and Intel led the index down this week, with losses of more than 8% and 6%, respectively.

— Alex Harring