Global Markets Today: Asian Shares Mixed As China Surprises With Rates Cut; South Korea, India Market Closed

Asian shares traded broadly up except for Hong Kong stocks on Tuesday as China trimmed short-term loan rates and reverse repo rates. Japanese and Australian shares climbed after earlier official data indicated that the economy expanded higher than expected. South Korean indexes are closed for the holiday. Similarly, the Indian market is also shut due to the celebration of 77th Independence Day today. Wall Street settled on a positive note overnight driven by tech stocks.

At the time of writing, ASX 200 surged by 0.6%, while Japan's Nikkei 225 climbed by 232 points or 0.72%. China's Shanghai Composite index traded flat, while the Hang Seng index dived by 194.48 points or 1.04%. {image-
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However, the overall market sentiment is volatile as growing concerns revolving around China's economy could dampen sentiment going ahead.

In a surprising move, the People's Bank of China on Tuesday cut its MLF rate to 2.5%, a big cut from earlier 2.65%. Also, the central bank has trimmed the 7-day reverse repo rate to 1.8% from the previous 1.9%. This rate cut does provide some comfort that economic help was on the way.

Further, Bloomberg reported that all but one of the 15 analysts surveyed by them had predicted the rate would stay unchanged. It reported that yield on the nation's 10-year government bond declined to the lowest level since 2020 after the cut.

However, in offshore trade, the Chinese yuan hit over nine-and-half-month low of 7.3114 against the US dollar. Also, the Japanese yen touched a nine-month low of 145.60 against the greenback.

Nevertheless, the dollar index touched its highest level in over a month at 103.170%. The demand for greenback increased as it was seen as a safe haven against the concerns over the Chinese economy and expectations of possible intervention from the Japanese government after the yen weakened to its lowest level since November last year.

Owing to the strong dollar, gold prices tumbled to over a one-month low. Spot gold was lower by 0.3% at $1,907.40 per ounce, after clocking its lowest since July 6. The US gold futures finished 0.1% lower at $1,944 per ounce on Monday.

As per a Reuters report, J.P. Morgan analysts warned of a "vicious cycle" of real estate financing challenges and said trust defaults could wipe 0.3% to 0.4% from China's growth directly.

Furthermore, the report highlighted that a slight improvement is expected from Chinese retail sales figures due around 0200 GMT, however, it may not shift a mood that is increasingly dark as things go from bad to worse for the property sector and start to spill over into other assets.

The real estate sector has emerged as the biggest elephant in the room for China's economic woes. As per reports, Country Garden, the country's largest private real estate developer, is struggling to meet its debt payment obligations and is most likely to delay payment on a private onshore bond.

Overnight, Wall Street ended in green driven by robust buying in tech shares. Dow Jones Industrial Average index jumped marginally to end at 35,307.63, while the S&P 500 surged 0.6% to 4,489.72. Meanwhile, the tech-heavy Nasdaq Composite Index zoomed by 143.48 points or 1.05% to settle at 13,788.33. Chipmaker Nvidia witnessed a huge rally of 7.1% after brokerage Morgan Stanley called the stock a 'top pick'.

Coming to bond markets, yields extended their upside with the US 10-year Treasury yields benchmark edging up by 0.013% to 4.20%, while the 2-year notes were steady at 4.9605%. Further, 3-year and 5-year treasury yields inched higher to 4.65% and 4.37% respectively. On Monday, U.S. and European yields gained traction as signs of economic resilience have kept investors hopeful coupled with the likelihood of rates being kept elevated ahead.

Also, Brent Crude futures rose by 0.2% to $86.36 per barrel. Its day's range is 85.50 - 86.71 per barrel as of now. Further, the US WTI also picked up to $82.61 per barrel.

At home, on Monday, Sensex ended at 65,401.92, up by 79.27 points or 0.12%, while Nifty 50 edged higher by 6.25 points or 0.03% to end at 19,434.55. India's volatility index ended at 4.10%. Bank Nifty shed over 108 points. Metal stocks were underperformers, while IT stocks outperformed.