Shares mixed as fears of rate hike rise, China cuts LPR

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Australian cement maker Adbri’s stock collapses 16% after posting profit drop

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

Adbri’s share fell more than 16.54% on Monday.

Net profit was AUD 48.1 million ($33.2 million), while sales grew 8% in the first half to AUD $812.4 million. It was “driven primarily by strong demand in the construction and mining sectors and improved pricing for most products,” the company said in a report.

Underlying net profit after tax was partially impacted by operational challenges related to extreme wet weather on Australia’s east coast and higher costs, the company said.

— Abigail Ng

Reserve Bank of New Zealand wants rates ‘comfortably above neutral’, Reuters reports

New Zealand policymakers want interest rates to be “comfortably above neutral” to combat rising prices, Reserve Bank of New Zealand deputy governor Christian Hawkesby said. according to Reuters.

The RBNZ increased its cash rate by 50 basis points to 3% last week. Hawkesby told Reuters that the central bank was considering an increase of 25 or 75 basis points.

He said taking the official cash rate above neutral would lower inflation and “give us some breathing room to see how things develop”.

“As soon as we get the [official cash rate] up to that level of 4%-4.25% we see things evenly balanced from there. So we would put as much weight on having to put the OCR on as putting it down,” he added.

Hawkesby said policymakers expect the economy to cool and recognize uncertainties ahead.

— Abigail Ng

IMF heads to Colombo for more economic solutions

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

“The goal is to make short-term progress towards a staff-level agreement on a future IMF Extended Fund Facility (EFF) arrangement,” the IMF said in a statement over the weekend.

“Since Sri Lanka’s public debt is assessed as unsustainable, approval by the IMF’s board of directors of the EFF program would require sufficient assurances from Sri Lanka’s creditors that debt sustainability will be restored.”

The IMF had already completed a first round of talks at the end of June as it worked with Colombo on a macroeconomic and structural policy package “to correct macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka’s growth potential.”

Other challenges to be solved include managing rising inflation and addressing severe balance of payments pressures.

The EEF is the IMF’s credit facility and helps countries solve balance of payments or cash flow problems.

— Su-Lin Tan

CNBC Pro: How to Reduce Risk in Your Portfolio Now, According to the Pros

Stocks have been volatile this year as a mix of recession fears, inflationary pressures and other macro risks rumble in the markets.

Here are three ways investors can adjust their portfolios to lower their risks or limit losses, according to Goldman Sachs, Wells Fargo and others.

Pro subscribers can read more here.

— Weizhen Tan

Chinese central bank cuts lending rates

The People’s Bank of China cuts one-year benchmark lending rate by 5 basis points and the five-year yield 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 in the one-year LPR, and half of the survey respondents expected the five-year rate cut by 15 basis points.

— Abigail Ng

CNBC Pro: JPMorgan Predicts When the Rally in Growth Stocks Will End

Investors have been flocking to growth stocks lately, but as recession fears mount, market watchers are deciding whether to switch to safer bets instead.

However, JPMorgan thinks the rally needs to go even further, citing several indicators to watch out for when considering a rotation out of growth stocks.

Pro subscribers can read the story here.

— Zavier Ongo

What to expect from Powell’s Jackson Hole speech

Fed Chair Jerome Powell is expected to speak this week at the central bank’s annual symposium in Jackson Hole, Wyoming, and shed some light on the pace of future rate hikes.

Powell may make aggressive comments from Fed officials who recently underlined their commitment to fighting inflation, even as investors enjoyed a summer rally, in part because of expectations of a less aggressive Fed.

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

Watch CNBC Pro for: more about what to expect from the Fed Chair.

— Sarah Min

China plans to cut benchmark interest rates, Reuters poll predicts

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

The majority of analysts forecast a cut in the one-year benchmark interest rate by 10 basis points, while expecting the five-year LPR to be cut by more than 10 basis points.

About half of the 30 poll participants predicted 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 at 4.45%. China cut its five-year LPR by 15 basis points in May, in a move that would support housing demand.

— Abigail Ng

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