Escalating trade tensions between the U.S. and China dominated market sentiment in the Asia-Pacific region, overshadowing China’s decision to keep its benchmark lending rates unchanged. The PBOC’s move to maintain the one-year LPR at 3.10% and the five-year LPR at 3.60% reflects a cautious stance amid a weakening yuan and external economic pressures.
Investors remain concerned over the Biden administration’s expanded tariffs on $18 billion worth of Chinese imports, including electric vehicles, batteries, and critical minerals. These measures threaten to disrupt supply chains and dampen export growth, forcing Beijing to accelerate domestic stimulus efforts.
Market reactions were mixed: India’s indices climbed on strong earnings, while Japan’s Nikkei slumped over 1%. South Korea’s Kospi edged lower, and Australian markets were closed. U.S. futures signaled further declines, compounding worries over a prolonged high-interest-rate environment.
