Stocks fall on rate hike fears, China cuts LPR

Stocks fall on rate hike fears, China cuts LPR
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The IMF will go to Colombo for more economic solutions

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

“The aim is to make progress towards a staff-level agreement on the IMF’s Extended Fund Program (EFF) in the near term,” the IMF said in a statement over the weekend.

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

The IMF had already concluded the first round of discussions with Colombo in late June, working on a package of macroeconomic and structural policies to “correct macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka’s growth potential”.

Other challenges to be addressed include containing rising inflation and addressing severe balance of payments pressures.

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

– Su Lin Tan

The Central Bank of China has lowered lending rates

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

This brings the one-year LPR to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters expected a 10 basis point cut in the one-year LPR, while half of respondents expected a 15 basis point cut in the five-year interest rate.

– Abigail Ng

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

Stocks have been volatile this year as a mix of recession fears, inflationary pressures and other macro risks roiled markets.

According to Goldman Sachs, Wells Fargo, and others, there are three ways investors can adjust their portfolios to reduce risk or reduce losses.

Pro subscribers can read more here.

– Weizhen Tan

CNBC Pro: JPMorgan predicts when rally in growth stocks will end

Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are opting to shift to safer bets instead.

However, JPMorgan thinks the rally still has a long way to go and is looking at several indicators as it considers a pivot away from growth stocks.

Pro subscribers can read the story here.

– Xavier Ong

Here’s 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 and shed some light on the pace of future rate hikes.

Powell could point to blunt comments from Fed officials recently stressing their commitment to fighting inflation as investors enjoy a summer rally in part due to less aggressive Fed expectations.

Again, St. Louis Fed President James Bullard said in an interview last week The Wall Street Journal he said he is considering another 0.75 percentage point interest rate hike at the September meeting.

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

– Sara Min

According to a Reuters poll, China is preparing to lower lending rates

China is set to release lending rates (LPR) on Monday Analysts expect widespread layoffs, according to a Reuters poll.

Most analysts expected the benchmark one-year lending rate to be cut by 10 basis points, while the five-year LPR expected to fall by more than 10 basis points.

About half of the 30 respondents to the poll forecast a 15-point decline, Reuters reported.

The one-year LPR is now at 3.7%, and the five-year rate is at 4.45%, after being cut in January. China was said to be supporting housing demand by cutting its five-year LPR by 15 basis points in May.

– Abigail Ng

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