Asian markets calmer as the yuan steadies, central banks cut rates
Posted August 6, 2019 10:56 p.m. EDT
Updated August 7, 2019 6:31 a.m. EDT
CNN — Asian markets were calmer Wednesday as central banks across the region moved aggressively to shore up slowing economic growth.
Currency fears took a back seat despite China fixing the yuan at another new 11-year low within a whisker of the symbolically important 7 to the dollar level.
China's Shanghai Composite Index ended down 0.3%, marking a sixth consecutive day of declines.
Japan's Nikkei lost 0.3%, extending its losing streak to a fourth straight day. South Korea's Kospi dropped 0.4%, down for a sixth straight session.
Hong Kong's Hang Seng Index inched up 0.1% following five days of losses.
A trio of central banks all cut interest rates Wednesday — a sign of how countries in the region are trying to protect their economies from a global downturn.
The Reserve Bank of India slashed its key lending rate to the lowest level in nine years, a move the central bank said was needed to boost growth and private investment.
New Zealand's central bank also made aggressive cuts, putting its official cash rate at a record low of 1%. The Bank of Thailand cut rates, too.
The US-China trade war continues to be a key concern, though markets aren't nearly as rattled as they were earlier this week. The People's Bank of China on Wednesday once again cut the yuan's daily reference rate, which is a "band" it sets every day to limit how far up or down the yuan's value can move. The rate was set at 6.9996 yuan per one US dollar, the lowest since May 2008.
The central bank's new reference rate is just a touch away from 7 yuan to one dollar — a psychologically important benchmark.
One dollar now buys about 7.05 yuan in trading in China. In trading outside of China, where the yuan moves more freely, one dollar can buy about 7.07 yuan, slightly stronger than earlier this week.
The Chinese central bank's move indicates that it is trying to guide the gradual depreciation of the yuan, Ken Cheung Kin Tai, chief Asian foreign exchange strategist for Mizuho Bank in Hong Kong.
Here are some of the other big moves on Asian markets.
Cathay Pacific, Hong Kong's flagship airline carrier, finished 0.8% higher in Hong Kong. The company on Wednesday posted a profit of $172 million, reversing a loss in the same period last year. Still, Cathay's stock has lost more than 4% this week, weighed down by mass protests in the city that have disrupted transportation services and affected flights. The company said the city's protests are also affecting flight bookings. And it expects geopolitical and trade tensions to impact air travel and freight demand.The Bank of Japan on Wednesday released a summary from its July monetary policy meeting and said the central bank will "continue with the current extremely powerful monetary easing for as long as possible."South Korea will take steps in a "swift and drastic manner" to stabilize financial markets in case of sharp volatility, Bang Ki-sun, deputy minister of economy and finance, said Tuesday in a meeting with officials in Seoul, according to the South Korean news agency Yonhap.On Tuesday, US stocks rebounded on optimism that currency tensions between the United States and China would ease. The Dow ended 312 points higher, or 1.2%. The S&P 500 rose 1.3%. The tech-heavy Nasdaq Composite, which was hit worst in Monday's selloff, finished 1.4% higher.