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Stocks mixed as rate hike fears mount, China cuts LPR

Stocks mixed as rate hike fears mount, China cuts LPR
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Australian cement maker Adbri’s stock plummets 16% after earnings fell

Shares in an Australian cement manufacturer addr crashed after the release and a 15% drop in net income for 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 income was AUD 48.1 million (US$33.2 million), while revenue for the first half rose 8% year-on-year to AUD 812.4 million. It was “mainly driven by strong demand in the construction and mining sectors and improved prices for most products,” the company said in a report.

Underlying net income after tax was partially impacted by operational challenges related to extremely wet weather events on Australia’s east coast and higher costs, the company said.

– Abigail Ng

The Reserve Bank of New Zealand wants rates “comfortably above neutral,” reports Reuters

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

That RBNZ hiked interest rates by 50 basis points to 3% last week. Hawkesby told Reuters the central bank was considering a 25 or 75 basis point hike.

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

“As soon as we have them [official cash rate] up to that 4% to 4.25% level we see things balanced from there. So we would put as much emphasis on putting the OCR on as we would put it down,” he added.

Hawkesby said policymakers expect the economy to slow and acknowledge that uncertainties lie ahead.

– Abigail Ng

IMF travels to Colombo to find more economical solutions

The International Monetary Fund will visit Colombo this week to continue talks with the Sri Lankan authorities on economic and financial reforms and policies.

“The goal is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near future,” the IMF said in a statement over the weekend.

“As Sri Lanka’s public debt is assessed as unsustainable, approval of the EFF program by the IMF’s Executive Board would require adequate assurances from Sri Lanka’s creditors that debt sustainability would be restored.”

The IMF had already concluded a first round of talks in late June as it worked with Colombo on a macroeconomic and structural policy package “to correct macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka’s growth potential”.

Other challenges that need to be addressed include rising inflation and dealing with severe pressures on the balance of payments.

The EDF is the IMF’s lending facility and helps countries deal with balance of payments or liquidity problems.

— Su-Lin Tan

CNBC Pro: How to Reduce Risk in Your Portfolio Now, According to the Pros

Equities have been volatile this year as a mix of recession fears, inflationary pressures and other macro risks have roiled markets.

Here are three ways investors can adjust their portfolios to lower their risks or mitigate losses, according to Goldman Sachs, Wells Fargo, and others.

Pro subscribers can read more here.

— Wheat Tan

The Chinese central bank cuts interest rates

That The People’s Bank of China cut its one-year interest rate by 5 basis points and the five-year rate by 15 basis points, an online statement said.

This puts the interest rate for one-year loans at 3.65% and the five-year LPR at 4.3%.

Analysts polled by Reuters expected a 10 basis point cut in the one-year LPR, and half of the survey participants expected a 15 basis point cut in the five-year rate.

– 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 switch to safer bets instead.

However, JPMorgan believes the rally needs to go further and listed several indicators to watch for when considering a rotation out of growth stocks.

Pro subscribers can Read the story here.

– Zavier Ong

What to Expect from Powell’s Jackson Hole Speech

Fed Chair Jerome Powell is expected to speak at the central bank’s annual symposium in Jackson Hole, Wyoming this week and shed some light on the pace of future rate hikes.

Powell may have aggressive comments from Fed officials who have recently underscored their commitment to fighting inflation, even as investors enjoyed a summer rally in part on expectations of a less aggressive Fed.

Even so, St. Louis Fed President James Bullard said last week in an interview with the The Wall Street Journal that it will consider another rate hike of 0.75 percentage point at the September meeting.

Check out CNBC Pro more on what to expect from the Fed chairman.

– Sarah Min

According to a Reuters survey, China will lower interest rates

China will release its policy rate (LPR) on Monday Analysts were generally expecting cuts, according to a Reuters poll.

The majority of analysts were forecasting a 10 basis point cut in the one-year benchmark interest rate, while expecting a more than 10 basis point cut in the five-year LPR.

Around half of the 30 participants in the survey forecast a 15 basis point cut, Reuters reported.

The one-year LPR is currently at 3.7% after a cut in January and the five-year rate is 4.45%. China cut the five-year LPR by 15 basis points in May, a move said to support housing demand.

– Abigail Ng

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