Stocks mixed as rate hike fears rise, China cuts LPR

Shares of Australian cement maker Adbri plunged after posting a 15% decline in net profit for the first six months of the year compared to the same period a year ago.

Adbri’s stock dropped more than 16.54% on Monday.

Net profit stood at 48.1 million Australian dollars ($33.2 million), while first half revenue increased 8% year-on-year to $812.4 million Australian dollars. It was “driven primarily by strong construction and mining sector demand and improved pricing across most products,” the company said in a report.

Underlying net profit after tax was hit in part by operational challenges related to extreme wet weather events on the east coast of Australia and higher costs, the company said.

— Abigail Ng

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

The RBNZ raised its cash rate by 50 basis points to 3% last week. Hawkesby told Reuters the central bank considered 25 or 75 basis point hikes.

He said taking the official cash rate above neutral would bring down inflation and “afford us some breathing space to see how things are playing out.”

“Once we get the [official cash rate] up into that 4%-4.25% level we’re seeing things evenly balanced from there. So we’d put equal weight on having to put the OCR up as we would putting it down,” he added.

Hawkesby said policymakers are expecting the economy to cool and acknowledge that uncertainties lie ahead.

— Abigail Ng

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

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

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

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

Other challenges that need to be resolved include containing rising levels of inflation and addressing the severe balance of payments pressures.

The EEF is the IMF’s lending facility and helps countries deal with balance of payments, or cashflow, problems.

— Su-Lin Tan

Stocks have been volatile this year, as a mix of recession fears, inflationary pressure and other macro risks roil markets.

Here are three ways that 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.

— Weizhen Tan

The People’s Bank of China cut its one-year benchmark lending rate by 5 basis points and its five-year rate by 15 basis points, according to an online statement.

That brings the one-year loan prime rate to 3.65% and the five-year LPR to 4.3%.

Analysts polled by Reuters expected a 10-basis-point cut to the one-year LPR, and half of the survey respondents expected the five-year rate to be lowered by 15 basis points.

— Abigail Ng

Investors have flocked to growth stocks of late, but as recession fears mount, market watchers are deciding whether to rotate into safer bets instead.

JPMorgan, however, thinks the rally still has further to go, and named several indicators to watch for when considering a rotation out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ong

Fed Chairman 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 interest rate hikes.

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

Still, St. Louis Fed President James Bullard said in an interview last week with the Wall Street Journal that he is considering another 0.75 percentage point interest rate hike at the September meeting.

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

— Sarah Min

China is set to release its loan prime rates (LPR) on Monday, and analysts widely expected cuts according to a Reuters poll.

Majority of analysts predicted the one-year benchmark lending rate to be lowered by 10 basis points, while they expected the five-year LPR to be cut by more than 10 basis points.

Around half of the poll’s 30 participants 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 at 4.45%. China cut the five-year LPR by 15 basis points in May, in a move that was said to support housing demand.

— Abigail Ng