Stocks mixed as rate hike fears rise, China cuts LPR

Stocks mixed as rate hike fears rise, China cuts LPR
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Shares of Australian cement producer Adbri plunge 16% after posting profit decline

Australian cement company shares Adbri sunk after publication a 15% decrease in net income during the first six months of the year compared to the same period a year ago.

Adbri shares fell more than 16.54% on Monday.

Net profit came in at A$48.1m ($33.2m), while first half revenue rose 8% year-on-year to A$812.4m. It was “primarily driven by strong demand from the construction and mining sectors and improving prices across most products,” the company said in a report.

Underlying net profit after tax was affected in part by operational challenges related to extreme wet weather events on Australia’s east coast and higher costs, the company said.

— Abigail Ng

Reserve Bank of New Zealand wants rates ‘comfortably above neutral’, Reuters reports

Policymakers in New Zealand want interest rates “comfortably above neutral” to combat rising prices, Reserve Bank of New Zealand Deputy Governor Christian Hawkesby said. according to Reuters.

the RBNZ raised its cash rate by 50 basis points to 3% In the past week. Hawkesby told Reuters the central bank had considered hikes of 25 or 75 basis points.

He said taking the official cash rate above neutral would reduce inflation and “give us some breathing room to see how things play out.”

“Once we have the [official cash rate] up to that level of 4% to 4.25%, we’re seeing things balance out evenly from there. So we would give the same importance to having to turn up the OCR as leaving it,” he added.

Hawkesby said policymakers expect the economy to cool off and acknowledge uncertainties looming.

— Abigail Ng

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

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

China’s central bank cuts interest rates on benchmark loans

the The People’s Bank of China cut its benchmark one-year interest rate at 5 basis points and its five-year rate at 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: 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.

—Zavier 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 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

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