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Asian stocks mixed ahead of Fed meeting after China cut rates

By JOE McDONALD, AP Business Writer

BEIJING (AP) — Asian stock markets were mostly down on Monday after China slashed an interest rate that affects mortgage lending as investors eagerly awaited this week’s Federal Reserve conference for further reading. signals of further possible US rate hikes to calm the surge in inflation.

Shanghai rose after China’s central bank lowered its target rate for a five-year loan to shore up weak home sales. Tokyo, Hong Kong, Seoul and Sydney fell. Oil prices fell more than $1 a barrel.

Investors are watching the Fed’s annual meeting in Jackson Hole, Wyoming, for rate forecasts after last week’s minutes from the US central bank’s July board meeting confirmed plans to further increases despite signs of weaker economic activity.

Traders fear that aggressive rate hikes this year by the Fed and central banks in Europe and Asia to rein in inflation that is at multi-decade highs could derail global economic growth.

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“The Fed is still feeling inflation. Its actions haven’t even begun to dampen inflationary pressures at all,” ACY Securities’ Clifford Bennett said in a report. ‘economic activity. The economic downturn was already in play for other reasons.

The Shanghai Composite Index rose 0.5% to 3,272.89 while the Nikkei 225 in Tokyo fell 0.5% to 28,794.79. The Hang Seng in Hong Kong fell less than 0.2% to 19,743.12.

South Korea’s Kospi fell 1.2% to 2,462.03 and Sydney’s S&P ASX-200 fell 0.9% to 7,051.70.

India’s Sensex opened 1.1% lower, dropping to 58,992.24. New Zealand and Singapore advanced while Bangkok and Jakarta fell.

On Wall Street, the benchmark S&P 500 lost 1.3% on Friday, erasing gains earlier in the week.

The S&P fell to 4,227.48, ending down 1.2% for the week. It is down 11.3% this year.

The Dow Jones Industrial Average fell 0.9% to 33,706.74. The Nasdaq composite lost 2% to 12,705.22.

Tech stocks suffered some of the biggest losses. Microsoft fell 1.4%. Retailers, banks and communications companies also fell.

Positives included General Motors, which rose 2.5% after restoring its dividend. Foot Locker soared 20% after replacing its CEO and reporting better-than-expected earnings.

Traders eagerly await more US earnings reports.

China’s central bank cut its prime lending rate, a target for market rates, as part of efforts to shore up weak economic growth after a debt crackdown sparked a housing slump and Shanghai and other cities have been shut down to fight virus outbreaks.

The target for a five-year loan has been reduced by 0.15 percentage points to 4.3%. The one-year loan rate, which affects other industries, was lowered by only 0.05 percentage points to 3.65%.

The move “reflects the severity” of the real estate crisis and shows Beijing is “ready to take stronger action,” Invesco’s David Chao said in a report.

Chinese leaders are trying to revive economic growth which fell to 2.5% more than a year earlier in the first half of 2022, less than half of their annual target of 5.5%, without resorting to stimulus measures widespread inflation-provoking or politically sensitive housing costs.

In energy markets, benchmark U.S. crude fell $1.19 to $89.25 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international trade, fell $1.18 to $95.54 a barrel in London.

The dollar rose to 137.24 yen from 136.91 yen on Friday. The euro fell from $1.0034 to $1.0035.

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