Asia-Pacific stocks drop as China cuts benchmark lending rate for first time since April 2020; oil prices fall

Key Points

• Asia-Pacific stocks were lower in Monday trade.
• China on Monday announced a cut in its one-year loan prime rate from 3.85% to 3.8% — the first such move since April 2020. Majority of traders and economists in a Reuters poll had expected cuts to the loan prime rate.
• Oil prices dropped more than 2% as investors continue to track the spread of the omicron Covid variant, with the World Health Organization recently warning that case numbers are doubling in 1.5 to 3 days in areas with community spread.

SINGAPORE — Shares in Asia-Pacific were lower in Monday trade, with China slashing its benchmark lending rate for the first time in more than one-and-a-half years.

Mainland Chinese stocks were lower, with the Shanghai composite down about 0.3% and the Shenzhen component falling 0.71%. Hong Kong’s Hang Seng index dipped 0.77%.

China on Monday announced a cut in its one-year loan prime rate from 3.85% to 3.8% — the first such move since April 2020. Majority of traders and economists in a Reuters poll had expected cuts to the loan prime rate.

Elsewhere, the Nikkei 225 in Japan led losses among the region’s major markets as it dropped 1.81% while the Topix index shed 1.66%. South Korea’s Kospi dipped 1.33%.

Australian stocks also declined, with the S&P/ASX 200 down 0.45%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.9% lower.

Oil drops more than 2%

Oil prices were lower in the morning of Asia trading hours, with international benchmark Brent crude futures falling 2.3% to $71.83 per barrel. U.S. crude futures shed 2.48% to $69.10 per barrel.

Those losses came as investors continue to track the spread of the omicron Covid variant, with the World Health Organization recently warning that the number of cases is doubling in 1.5 to 3 days in areas with community spread.

In Europe, the Netherlands went into lockdown from Sunday till at least Jan. 14 amid fears that its healthcare system “will become overburdened in January.” Elsewhere, Britain has also been seeing a surge in Covid infections.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.661 after recently climbing from below 96.

The Japanese yen traded at 113.47 per dollar, stronger than levels above 114 seen against the greenback last week. The Australian dollar was at $0.7115, off levels above $0.72 seen last week.

Source : CNBC