3 hours ago
China’s major banks cut interest rates on yuan deposits
Five of China’s largest banks have cut interest rates on yuan deposits, according to Portal. These include the Industrial and Commercial Bank of China, China Construction Bank Corp and the Agricultural Bank of China.
This came on the same day that the People’s Bank of China announced that it would cut the reserve requirement ratio for financial institutions by 200 basis points starting September 15.
ICBC cut the interest rate on one-year yuan deposits by 10 basis points to 1.55% and the interest rate on two-year yuan deposits by 20 basis points to 1.85%, effective immediately. Interest rates on three- and five-year deposits were reduced by 25 basis points.
Portal reported that BOC cut interest rates by the same amount as ICBC, adding that the Agricultural Bank of China “made similar cuts.”
—Portal, Lim Hui Jie
3 hours ago
South Korea’s factory activity shrinks faster in August
Factory activity in South Korea fell more quickly in August, according to private surveys from S&P Global.
The country’s manufacturing purchasing managers’ index fell to 48.9 from 49.4, marking the 14th consecutive month that the PMI remained below the breakeven point of 50.
A PMI reading above 50 means expansion, while a reading below 50 means the sector is contracting.
—Lim Hui Jie
4 hours ago
Factory activity in Japan fell for the third straight month in July
Factory activity in Japan fell for the third straight month in August, according to private surveys by au Jibun Bank.
The country’s manufacturing purchasing index was at 49.6, slightly lower than the 49.7 in last week’s flash estimates and unchanged from the July reading.
“Weak customer confidence and subdued economic conditions reportedly weighed on new orders, although some firms said new product launches partially offset the decline,” the bank said in a report.
—Lim Hui Jie
7 hours ago
China’s central bank cuts the reserve requirement ratio by 200 basis points
The People’s Bank of China announced on Friday that it would cut the reserve requirement ratio for financial institutions from 6% to 4% starting September 15.
The cut follows a series of cuts to various interest rates in recent weeks to support the economy.
According to Wind Information, the PBOC on Friday set the yuan’s midpoint against the US dollar at 7.1788, slightly stronger than Thursday’s 7.1811.
According to Wind, the overseas yuan weakened against the US dollar to over 7.24 yuan.
—Evelyn Cheng
9 hours ago
Russell Investments strategist says investors should be wary of a possible recession
Russell Investments investment strategy analyst BeiChen Lin believes interest rates are likely to remain stable in September unless there is a significant recovery in the labor market or inflation rates.
“Our estimates suggest that U.S. interest rates are already in extremely restrictive territory,” Lin wrote in a note, adding that the risk of a mild to moderate U.S. recession next year remains likely. “If interest rates remain stable at these high levels, that just means the Fed is not putting the brakes further in the ground, not that the Fed has taken its foot off the brake.”
Investors should refrain from chasing short-term market rallies and instead favor defensive stocks from companies with strong balance sheets, the strategist advised.
“After a long wait at a stop, it’s understandable that people get excited when a bus finally appears to be approaching,” he said. “But this is a bus without an LED destination display, and it could turn out to be an out-of-town express train that takes you past a soft-landing village and into the recession zone.”
—Pia Singh
10 hours ago
Weigold of Manulife Investment Management says opportunities await in the municipal bond space
Municipal bonds are looking promising as yields rise and recession fears grow, and sophisticated investors may be able to pick up some attractive names in the space, says Adam Weigold of Manulife Investment Management.
Aside from general obligation bonds, which give state and local governments a way to raise money, investors could also consider revenue bonds, said Weigold, the firm’s head of municipal strategy. “We like airports,” he told CNBC in a telephone interview. “Airport usage has come back significantly… They have a lot of cash on hand and do well during recessions.”
He also highlighted hospitals and healthcare for investors who have a longer-term perspective.
In an economic downturn, a countercyclical play could emerge, Weigold said: tobacco bonds, a high-yield area of the municipal market.
Tobacco bonds have been around since 1998, when states reached a landmark agreement with tobacco manufacturers to cover health care costs associated with smoking. These producers now make payments to these establishing states, some of which have securitized the cash flows and are now issuing bonds. Ultimately, the payments are borne by the tobacco producers.
“In recessions, people smoke more,” Weigold added. “There are parts of the market that can become interesting in a recession.”
-Darla Mercado
10 hours ago
Stocks make the biggest moves after hours
Check out the companies making headlines after hours.
- MongoDB – Shares of the database software maker rose 4.4% in extended trading. MongoDB reported second-quarter earnings of 93 cents per share, excluding items, on total revenue of $423.8 million. That was above the 46 cents in earnings per share and $393 million in revenue that analysts polled by Refinitiv had expected.
- Dell Technologies – Dell rose 7.5% after second-quarter earnings beat Wall Street expectations. The technology company reported earnings per share of $1.74, excluding items, and revenue of $22.93 billion, while analysts polled by Refinitiv reported earnings per share of $1.14 and $20.85 billion. Dollars expected.
- Broadcom – Shares of the semiconductor maker fell 4.7% after the company gave weak guidance for the fourth quarter. The semiconductor company forecast fourth-quarter revenue of $9.27 billion, while analysts surveyed by Refinitiv had expected $9.275 billion.
The full list can be found here.
—Pia Singh
10 hours ago
Stock futures open little changed on Thursday evening
Stock futures opened little changed on Thursday evening as investors await the August payroll report.
Futures on the S&P 500 and Nasdaq 100 opened 0.02% and 0.08% lower, respectively. Dow futures rose 10 points, or 0.03%.
-Darla Mercado