SYDNEY- Asian shares slid anew on Monday, getting little lift from a surprise rate cut by China’s central bank, while Wall Street futures firmed in the wake of President Joe Biden’s decision to bow out of the election race.
The People’s Bank of China cut short-term rates by 10 basis points, which pulled down long-term borrowing costs and bond yields. The move follows Beijing’s release of a policy document on Sunday outlining its ambitions for the economy.
Investors seemed underwhelmed with the move, in part as it only emphasized how weak the economy was, and Chinese blue chips.CSI300 slipped 0.9 percent along with the yuan.
“Basically all the fundamental factors point to the fact that China needs a lower rate environment, especially the real rate is really high…in this kind of disinflationary environment,” said Gary Ng, Asia-Pacific senior economist at Natixis in Hong Kong.
“I think the general trend is that it’s pretty much in line with the fact that the economy is not that great, and it seems that there’s a bit of urgency from the authorities to stimulate it now.”
MSCI’s broadest index of Asia-Pacific shares outside Japan lost another 0.7 percent , having shed 3 percent last week.
Japan’s Nikkei dropped 1.2 percent and South Korea’s benchmark index fell 1.3 percent .
Taiwan was having another tough session with a loss of 2.3 percent amid concerns about US restrictions on chip sales.
Investors seemed much better prepared for news President Biden would drop out of the election race and endorse Vice President Kamala Harris for the Democratic ticket.
Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 4 cents to 60 cents, while Harris climbed 12 cents to 39 cents. California governor Gavin Newsom, another possible Democratic challenger, trailed at 4 cents.
Markets took the news in their stride, with S&P 500 stock futures nudging up 0.1 percent , while Nasdaq futures added 0.2 percent . Futures for 10-year Treasuries rose 2 ticks, while 10-year bond yields dipped 2 basis point to 4.22 percent.
