Asia stocks stall at one-month lows as slowing China cuts rates

Asian stock markets wallowed at one-month lows on Tuesday and the yuan struggled as China cut interest rates as another round of disappointing data underscored its economic malaise.

Cuts to China’s one-year loans to financial institutions, at 15 basis points, were the largest since the outset of the COVID pandemic. Industrial output and retail sales growth both slowed from a month earlier to a year-on-year pace of 3.7% and 2.5% respectively, missing expectations.

The yuan dropped to its lowest in 9-1/2 months, and sources told Reuters that China’s major state-owned banks stepped into the spot market to steady the currency. After that, it hit 7.2743 per dollar, having been as low as 7.2875.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged down 0.1% to 509.12, not far from a one-month low on Monday of 506.3 as worry about China’s frozen property sector swept across regional markets.

Property investment, sales and fundraising extended their slide in July, the data on Tuesday showed. New construction starts by floor area are down nearly 25% year-on-year and highlight how there is neither the appetite nor funds to build or buy.

“We reckon that markets still underestimate the aftermath of the significant collapse in China’s property sector, which accounts for more than half of global new home sales,” said analysts at Japanese bank Nomura.

This report’s information was first seen on REUTERS; to read more, click this link.