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Chinese Central Bank Cuts 5-Year Prime Lending Rate, Euro Stocks Affected – Analysis and Trends


by Stefania Blasioli and Paolo Paronetto

Tokyo closes negative. China’s central bank cut the 5-year prime lending rate (LPR) by 25 basis points

3′ reading

(Il Sole 24 Ore Radiocor) – The handbrake is on European stock exchanges at the start, the day after a session already characterized by caution which saw the absence of trade on Wall Street, stopped for Presidents’ Day, in the wake of the weakness of the Asian markets with theNIKKEI 225 of Tokyo which closed down. Investors are looking to the Chinese Central Bank which this morning cut the prime rate on 5-year loans (LPR) by 25 basis points, bringing it to 3.95% from 4.20%. This is the first cut since last August and the highest ever recorded on the benchmark rate applied to real estate mortgages, which however does not appear to have translated into a positive impact on Chinese and Asian stocks. However, the one-year prime loan rate remains unchanged at 3.45%, among the preferential rates offered by commercial banks to the best customers. Also pay attention to the data relating to salary negotiations, which the ECB will release in the morning, useful for understanding the future decisions of the Frankfurt institute given that President Christine Lagarde has reiterated that it is an indicator to be kept under observation in view of future cuts of interest rates. Meanwhile, there remains great anticipation for the publication of the latest Fed and ECB meetings, on Wednesday and Thursday respectively.

So the FTSE MIB of Milan moves around parity, while the other indices of the Old Continent travel in no particular order: Frankfurt (DAX 40 ), Madrid (IBEX 35 ), Amsterdam (AEX ), Paris (CAC 40 ).

Unipol takes off in Piazza Affari, sales on Iveco and Tim

Among the stocks on Piazza Affari, it is positioned at the top of the Ftse Mib Unipolfollowed by Leonardo – Finmeccanica e Banca Mps . The pharmaceutical sector is still positive after the good performances of the day before, with Diasorin , Amplifier e remember. At the end of the main list Iveco Group e Telecom Italia after Monday’s increases.

Focus on Generali, Fondazione Crt consolidates share to 2%

Purchase on General after the words of the president of the Crt Foundation, Fabrizio Palenzona, in an interview given to Il Sole 24 Ore following the exit of the organization from the shareholding of Banco Bpm with the sale of 1.8%. With the funds obtained from the sale of the package, the Crt Foundation has «consolidated its historic long-term participation in Generali, so as to increase the flow of dividends, which together with UniCredit and Mundys constitute the largest part of the resources that we make available to the territory ». In the Leone company therefore, Palenzona explained, “we are and remain on the 2% threshold”.

The Chinese central bank cuts the prime rate on 5-year loans

The Chinese Central Bank has in fact cut the 5-year prime lending rate (LPR) by 25 basis points, bringing it to 3.95% from 4.20%, in efforts to revive the struggling economy: this is the first cut of its kind since August and the highest ever recorded on the real estate mortgage benchmark, in the midst of the serious crisis in the sector. The one-year loan prime rate, however, remains unchanged at 3.45%, among the preferential rates offered by commercial banks to the best customers and a reference for those applied to other loans.

The latest interventions on LPR rates date back to August (one year) and June (5 years): both are at historic lows, in the PBOC’s efforts to encourage commercial banks to grant more credit and at more advantageous rates. And they follow a trend in stark contrast to most other major economies, which are instead raising rates to curb inflation. The decision was anticipated on Sunday on its official WeChat account by the Financial News, a newspaper supported by the Central Bank, quoting market operators: «The lowering of the five-year LPR will help stabilize confidence, promote investment and consumption, and will also help to support stable and healthy developments in the real estate market.”

Spread stable at 149 points, ten-year yield unchanged at 3.89%

The spread between BTp and Bund is stable: the yield differential between the benchmark ten-year BTp (ISIN IT0005560948) and the German equivalent maturity is indicated at 149 basis points, unchanged compared to the previous reference. The yield of the benchmark ten-year BTp was also stable, marking a first position at 3.89%, with no changes compared to Monday’s closing.

Euro/dollar at 1.08, the yen weakens. The gas continues to descend

On the currency the euro/dollar ratio is at 1.077 (1.08 at the closing on the day before). The single currency is also worth 161.95 yen (from 161.5), while the greenback crosses the Japanese currency at 150.3 (in the 150 area on Monday). The price of crude oil was flat with April Brent at 83.53 dollars per barrel (-0.04%) and the WTI of the same maturity at 78.44 dollars (-0.04%). TTF natural gas showed little change and continued to fall on Monday in Europe, given the closure of the US markets, with the price continuing to approach the lows of last June, in the area of ​​23 euros per megawatt hour: it is currently traded in Amsterdam at 23 .88 euros (+0.74%).

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  • Paolo Paronetto

    Radiocor editor

View on ilsole24ore.com
2024-02-20 10:24:41
#Stock #market #Europe #cautious #Milan #flat #China #cuts #5year #loan #rate

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