Stocks fall on rate hike fears, China cuts LPR

Stocks fall on rate hike fears, China cuts LPR
Written by admin

IMF will travel to Colombo in search of more economic solutions

The International Monetary Fund will visit Colombo this week to continue talks with the Sri Lankan authorities on economic and financial policies and reforms.

“The aim is to move towards reaching a staff-level agreement on a possible IMF Extended Funds Facility (EFF) arrangement in the near term,” the IMF said in a statement over the weekend.

“Because Sri Lanka’s public debt is considered unsustainable, approval of the EFF program by the IMF Executive Board would require adequate assurances from Sri Lanka’s creditors that debt sustainability will be restored.”

The IMF had already concluded a first round of discussion at the end of June when it worked on a macroeconomic and structural policy package with Colombo “to correct macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka’s growth potential.” .

Other challenges that need to be resolved include containing rising levels of inflation and addressing severe pressures on the balance of payments.

The EEF is the IMF’s lending facility and helps countries deal with balance of payments or cash flow problems.

—Su-Lin Tan

China’s central bank cuts interest rates on benchmark loans

The People’s Bank of China cut its benchmark one-year lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.

That raises the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters had expected a 10 basis point cut in the one-year LPR, with half of those polled expecting the five-year rate to be lowered by 15 basis points.

— Abigail Ng

CNBC Pro: How to reduce risk in your portfolio right now, according to the pros

Stocks have been volatile this year as a combination of recession fears, inflation pressure and other macroeconomic risks unsettle markets.

Here are three ways investors can adjust their portfolios to reduce their risks or mitigate losses, according to Goldman Sachs, Wells Fargo and others.

Professional subscribers can read more here.

— Weizhen Tan

CNBC Pro: JPMorgan Predicts When Growth Stocks’ Rally Will End

Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are deciding whether to rotate to safer bets.

JPMorgan, however, believes the rally still has some way to go and named several pointers to watch when considering a rotation out of growth stocks.

Professional subscribers can read the story here.

—Xavier Ong

What to expect from Powell’s Jackson Hole speech

Fed Chairman Jerome Powell is expected to speak at the central bank’s annual symposium in Jackson Hole, Wyoming, this week, shedding some light on the pace of future interest rate hikes.

Powell may preempt aggressive comments from Fed officials who recently underlined their commitment to fighting inflation, even as investors enjoyed a summer rally in part on expectations of a less aggressive Fed.

Still, St. Louis Fed President James Bullard said in an interview last week with the Wall Street Journal which is considering another interest rate hike of 0.75 percentage points at the September meeting.

Check out CNBC Pro for More on what to expect from the Fed chair.

—Sarah Min

China is ready to lower its benchmark lending rates, a Reuters poll predicts

China is set to publish its lending prime rates (LPR) on Monday, and Analysts had widely expected cuts according to a Reuters poll.

Most analysts predicted the one-year benchmark interest rate would drop by 10 basis points, while they expected the five-year LPR to drop by more than 10 basis points.

About half of the 30 survey participants forecast a cut of 15 basis points, Reuters reported.

The one-year LPR is currently at 3.7% after a cut in January, and the five-year rate is at 4.45%. China cut the five-year LPR by 15 basis points in May, in a move said to support housing demand.

— Abigail Ng

About the author


Leave a Comment