Asia stocks: China rises after PBOC holds rates, Australia slides from record high

Investing.com-- Most Asian stocks advanced on Monday with Chinese stocks up after the People’s Bank left a benchmark lending rate at record lows, while Australian stocks tumbled from recent peaks.

Regional trading volumes were muted on account of a trading holiday in Japan. But futures for the Nikkei 225 index rose 0.2% after Japan’s ruling coalition party, led by Prime Minister Shigeru Ishiba, lost its majority in the upper house. 

Asian markets took middling cues from Wall Street, which closed flat on Friday amid caution over a barrage of key earnings this week. S&P 500 Futures rose 0.1% in Asian trade.

U.S. President Donald Trump’s August 1 trade tariff deadline also remained squarely in focus, with Washington having signed few trade agreements in recent weeks.

Chinese stocks upbeat after loan prime rate hold

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.4% and 0.5%, respectively, while Hong Kong’s Hang Seng index added 0.5%. Strength in tech stocks saw the Hang Seng reach a three-year high of over 25,000 points. 

The People’s Bank of China left its benchmark loan prime rate unchanged at historic lows on Monday, as widely expected. 

The hold comes amid some expectations that Beijing will slow its pace of monetary stimulus, especially after China and the U.S. agreed to lower their respective trade tariffs against each other in May and June. 

Still, China’s monetary policy is expected to remain largely expansionary, heralding more stimulus support and rate cuts from Beijing as the world’s second largest economy grapples with slowing growth. 

Hong Kong-listed Chinese internet firms were a major outperformer in the past week, especially after artificial intelligence major Nvidia (NASDAQ:NVDA) signaled that it will resume selling a key chip in the country. Nvidia’s chips are crucial for China’s AI ambitions, which are spearheaded by majors such as Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), and Tencent Holdings Ltd (HK:0700). 

Broader Asian markets were also largely upbeat on Monday, after a mixed performance over the past week. South Korea’s KOSPI added 0.5%, while Singapore’s Straits Times index surged 0.7% to a record-high 4,225.79 points. Singapore markets have been on a tear amid signs of improving export health for the country. 

Gift Nifty 50 Futures fell 0.1%, pointing to a muted open for the Nifty 50. Indian stocks have whipsawed around the 25,000 point as investors held out for a U.S.-India trade deal. 

Australian stocks slide from record highs 

Australia’s ASX 200 was by far the worst performer in Asia, tumbling 1% after hitting a series of record highs last week.

The ASX was pressured by losses in heavyweight bank and mining stocks, both of which were wallopped by profit-taking after a strong run-up last week.

Investors grew more concerned that global trade disruptions, due to U.S. tariffs, could disrupt Australia’s export-reliant economy. The country is a major exporter of metals and mineral fuels to China and Europe, both of which are subject to steep U.S. trade tariffs. 

A surprise decline in Australia’s labor market also raised some concerns about growing cracks in the economy.