Asian stocks were mostly lower Monday after President Joe Biden exited the 2024 race. The downbeat start to the week followed losses Friday on Wall Street as businesses around the world scrambled to contain disruptions from a massive technology outage. US futures were little changed and oil prices rose. Biden announced his withdrawal from the 2024 presidential race on Sunday and endorsed Vice President Kamala Harris to take on former President Donald Trump, adding to uncertainties over the future of the world's largest economy.
Japan’s benchmark Nikkei 225 slipped 1.2% to 39,599.00. The Hang Seng in Hong Kong added 1.3% to 17,640.51 and the Shanghai Composite index dropped 0.6% to 2,964.22 after China's central bank unexpectedly lowered its one-year benchmark loan prime rate, or LPR, which is the standard reference for most business loans, to 3.35% from 3.45%.
The People's Bank of China cut the five-year loan prime rate, a benchmark for mortgages, to 3.85% from 3.95%, aiming to boost slowing growth and break out of a prolonged property slump. This came after the government recently reported the economy expanded at a slower-than-forecast 4.7% annual pace in the second quarter.
“Chinese commercial banks’ net interest margins are already at a record lows and non-performing loans have been growing rapidly; rate cuts will likely add to the pressure on Chinese banks.,” Lynn Song of ING Economics said in a commentary. Elsewhere in Asia, Australia’s S&P/ASX 200 dipped 0.6% to 7,926.30. South Korea’s Kospi lost 1% to 2,767.62.
On Friday, the S&P 500 fell 0.7% and ended at 5,505.00, closing its first losing week in the last three and its worst since April. The Dow Jones Industrial Average dropped 0.9% to 40,287.53, while the Nasdaq composite sank 0.8% to 17,726.94.
Friday’s moves came as a major outage disrupted flights, banks and even doctors’ appointments around the world. Cybersecurity firm CrowdStrike said the issue believed to be behind the outage was not a security incident or cyberattack and that it had deployed a fix. The company said the problem lay in a faulty update sent to computers running Microsoft Windows. CrowdStrike’s stock dropped 11.1%, while Microsoft’s lost 0.8%.
Richard Stiennon, a cybersecurity industry analyst, called it a historic mistake by CrowdStrike, but he also said he did not think it revealed a bigger problem with the cybersecurity industry or with CrowdStrike as a company. “We all realize you can fat finger something, mistype something, you know whatever -- we don’t know the technical details yet of how it caused the ‘bluescreen of death’” for users, he said. “The markets are going to forgive them, the customers are going to forgive them, and this will blow over,” he said.
Crowdstrike’s stock trimmed its loss somewhat through the day, but it still turned in its worst performance since 2022. Stocks of rival cybersecurity firms climbed, including a 7.8% jump for SentinelOne and a 2.2% rise for Palo Alto Networks.
The outage hit check-in procedures at airports around the world, causing long lines of frustrated fliers. That initially helped pull down U.S. airline stocks, but they quickly pared their losses. United Airlines flipped to a gain of 3.3%, for example. It said many travellers may experience delays, and it issued a waiver to make it easier to change travel plans.
American Airlines Group slipped 0.4%, and Delta Air Lines rose 1.2%. In the bond market, yields ticked higher. The yield on the 10-year Treasury rose to 4.23% from 4.20% late Thursday. In other dealings early Monday, U.S. benchmark crude oil gained 31 cents to $78.95 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 35 cents to $82.98 per barrel. The U.S. dollar fell to 156.53 Japanese yen from 157.49 yen. The euro rose to $1.0884 from $1.0877.
(With inputs from agency)
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