Fed's rates cut depresses market

Huang Yixuan
China stocks extended losses as the US Federal Reserve announces its first rate cut since the Great Recession of 2018.
Huang Yixuan

China stocks extended their losses on Thursday, partly affected by a slump in US shares after the US Federal Reserve announced its first rate cut in over a decade.

The benchmark Shanghai Composite Index fell 0.81 percent to 2,908.77 points. The smaller Shenzhen Component Index also dropped 0.63 percent to 9,268.05 points, and the blue chip CSI300 index closed 0.83 percent lower at 3,802.47 points.

Turnover on the two major bourses added up to 373.99 billion yuan (US$ billion), up from the previous session's 357.61 billion yuan.

On Wednesday, the Fed lowered interest rates by 0.25 percent, the first cut since the Great Recession in 2008. The US stock market then tumbled as Fed chairman Jerome Powell said it did not mean policymakers will follow up with an aggressive rate-reducing regime.

Meanwhile, China's official manufacturing PMI was 49.7 in July, the third consecutive month stuck in contraction territory, data released by the National Statistics Bureau on Wednesday showed.

Precious metals shares led the decline. Shandong Humon Smelting Co fell 7.4 percent while Yintai Resources Co, YanTai Yuancheng Gold Co and Hunan Gold Corp all dropped by over 6 percent.

The household appliances sector was also weak, with Qijing Machinery Co, Aucma Co and Zhejiang Kangsheng Co all sliding by over 4 percent.

Office supplies shares, the aviation sector and real estate firms were also among the big decliners.

On the newly launched STAR Market, however, all 25 listed companies posted gains, among which stocks of Suzhou Harmontronics Automation Technology Co and Beijing Worldia Diamond Tools Co both surged by the daily limit of 10 percent.

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