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Asian markets slip into consolidation mode as China’s surprise rate cut caps losses

08 Jun 2012 Evaluate

Stock markets across the Asian region slipped into consolidation mode on the week’s last trading session with almost all major equity indices drifting into the negative terrain. Sentiments largely were influenced by the disappointing overnight cues from US markets after Federal Reserve Chairman Ben Bernanke dimmed hopes for more stimulus measures while Fitch downgraded Spain’s credit rating. However, the downside in markets in the region remained capped after reports showed that Chinese central bank unexpectedly slashed benchmark lending and deposit rates by 25 basis points in its bid to prop up flagging growth rate while giving banks additional flexibility to set competitive lending and deposit rates.

Barring the Chinese Shanghai Composite that traded with slight gains post rate cut announcement, all benchmarks in the region traded with moderate losses. However, the Japanese frontline equity index got heavily pummeled by market participants as it plunged close to two percent on disappointing global developments. Meanwhile investors also overlooked the encouraging Japanese GDP data, which showed that world’s third largest economy grew at a faster than expected rate of 4.7 percent on annualized basis in the January-March quarter compared with the initial estimate of 4.1 percent.

Hang Seng Index declined 62.94 points or 0.34% to 18,615.35, Jakarta Composite fell 6.72 points or 0.18% to 3,833.87, KLSE Composite slipped 4.70 points or 0.30% to 1,570.61, Nikkei 225 got pounded by 169.37 points or 1.96% to 8,470.35, Straits Times Index dropped 14.05 points or 0.51% to 2,745.21, KOSPI Composite Index shed 8.49 points or 0.46% to 1,839.46 and Taiwan Weighted sank 58.46 points or 0.83% to 7,021.85.

On the other hand only Shanghai Composite rose 1.58 points or 0.07% to 2,294.71.

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