Stocks drop on interest rate hike fears, China cuts LPR

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

“The goal is to make progress toward a staff-level agreement on a possible arrangement for the IMF’s Extended Fund Facility in the near term,” the IMF said in a statement over the weekend.

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

The IMF had already concluded the first round of 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 must be resolved include containing high levels of inflation and addressing severe pressures on the balance of payments.

The IMF is the IMF’s lending facility and helps countries deal with balance of payments or cash flow problems.

– So Lin Tan

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

This 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 from the one-year LPR, and half of respondents expected the five-year rate to be cut by 15 basis points.

– Abigail Ng

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

Here are three ways investors can adjust their portfolios to reduce their risk or mitigate losses, according to Goldman Sachs, Wells Fargo, and others.

Professional subscribers can Read more here.

– Weezin Tan

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

However, JPMorgan believes the rally still needs more upside, and has identified several indicators to watch when considering a rotation on developing stocks.

Professional subscribers can Read the story here.

– Xavier Ong

Federal Reserve 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 rate hikes.

Powell may offer hawkish comments from Fed officials who recently reiterated their commitment to fighting inflation, even as investors enjoyed a summer rally in part due to the Fed’s less aggressive outlook.

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

Check out CNBC Pro for More on what to expect from the Federal Reserve Chairman.

– Sarah Min

China is preparing to release loan principal interest rates (LPR) on Monday, and Analysts widely expected cuts, according to a Reuters poll.

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

Reuters reported that about half of the 30 respondents expected a cut of 15 basis points.

The one-year LPR is currently 3.7% after a cut in January, and the five-year rate is at 4.45%. China cut its five-year LPR by 15 basis points in May, in a move said to support housing demand.

– Abigail Ng