August 1, 2019 / 4:32 AM / 23 days ago

China, Hong Kong stocks fall after Fed dampens long-term rate cut outlook

* SSEC falls 0.8%, CSI300 0.8% lower, HSI slips 0.7%

* HK->Shanghai Connect daily quota used -1.6%, Shanghai->HK daily quota used 1.5%

* FTSE China A50 -1.1%

SHANGHAI, Aug 1(Reuters) - China and Hong Kong stocks fell on Thursday, tracking losses in other Asian markets, after the U.S. Federal Reserve’s comments dampened long-term rate cut outlook and latest Sino-U.S. trade talks ended with little sign of progress.

** The CSI300 index fell 0.8%, to 3,804.02 at the end of the morning session, while the Shanghai Composite Index lost 0.8%, to 2,909.63.

** The Hang Seng index dropped 0.7%, to 27,588.55, while the Hong Kong China Enterprises Index lost 0.5%, to 10,619.60.

** The U.S. Federal Reserve cut interest rates on Wednesday, but the head of the U.S. central bank said the move might not be the start of a lengthy campaign to shore up the economy against risks, including global weakness.

** China’s central bank said it will skip open market operations on Thursday, but gave no sign of whether it will immediately follow an overnight interest rate cut by the U.S. Federal Reserve.

** The world’s second largest economy remains under pressure amid ongoing trade tensions.

** Pressure on China’s factories eased a little in July, thanks to growth-boosting steps from the government, but overall manufacturing activity remained in contraction as a trade war with the United States dented export orders, a private survey showed on Thursday.

** The readings were largely in line with an official gauge that showed factory activity last month shrank at a slower-than-expected pace.

** U.S. and Chinese negotiators ended a brief round of trade talks on Wednesday with little sign of progress and agreed to meet again in September, prolonging an uneasy truce in a year-long trade war between the world’s two largest economies.

** Going forward China is more likely to adopt proactive fiscal policies, including cutting fees and tax and boosting infrastructure investment, while maintaining prudent and stable monetary policy, China Development Bank Securities noted in report

** Chances are relatively low for rate and RRR cuts, unless there are major changes in Sino-U.S. talks, the brokerage added.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.69% while Japan’s Nikkei index was down 0.14%.

** The yuan was quoted at 6.8987 per U.S. dollar, 0.21% weaker than the previous close of 6.884.

** About 8.17 billion shares have traded so far on the Shanghai exchange, roughly 46.2% of the market’s 30-day moving average of 17.67 billion shares a day. The volume traded was 14.11 billion as of the last full trading day.

** As of 0417 GMT, China’s A-shares were trading at a premium of 29.67% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Rashmi Aich

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