<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View-820x462.jpeg" alt="" class="wp-image-426877" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286480-1692078407337-gettyimages-1236477975-Beijing_CBD_Night_View.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A night view of the Central Business District in Beijing, China, Nov 10, 2021. Future Publishing | Future Publishing | Getty Images</figcaption></figure>



China’s central bank cut its one-year loan prime rate Monday, while leaving its five-year rate unchanged. These decisions are weaker than expectations for more muscular policy intervention following a raft of data that pointed to faltering growth momentum in the world’s second-largest economy.



The People’s Bank of China trimmed its one-year loan prime rate — the peg for most household and corporate loans in China — by 10 basis points from 3.55% to 3.45%, just shy of the 15 basis points that a majority of economists expected in a Reuters poll. This was the second time China has cut this rate in three months.



The PBOC left its five-year loan prime rate — the peg for most mortgages — unchanged at 4.2%, while economists expected a 15 basis point cut due to default risks from festering liquidity woes in the country’s property sector. Country Garden is on the verge of default, while Evergrande filed last week for bankruptcy protection in a Manhattan court.



“The underwhelming LPR announcement strengthens our view that the PBOC is unlikely to embrace the much larger rates cuts that would be required to revive credit demand,” Julian Evans-Pritchard, Capital Economics’ head of China, wrote in a note.



“Hopes for a stimulus-led turnaround in economic activity largely depend on the prospect of greater fiscal support,” he added.



On Monday, the Hang Seng Index sank by as much as nearly 1.8% to touch its lowest levels since late November, and the China Enterprises Index of the largest offshore listings in Hong Kong each sank by as much as 1.9%. The CSI 300 index of mainland-listed blue chips was by as much as 1%.



Monday’s actions follow surprise cuts to its short- and medium-term lending rates last Tuesday after a raft of economic data pointed to weak credit growth and emerging deflation risks, intensifying fears of a rapidly slowing economy. Missed payments on some shadow banking-linked trust products are further spooking investors.



The PBOC said Sunday that China will coordinate financial support to resolve local government debt risks and reduce systemic risks, while also looking to “adjust and optimize” credit policies for the property sector and lower financing costs for the economy.



Last week, the PBOC lowered the rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility loans&nbsp;to some financial institutions by 15 basis points to 2.50% from 2.65% previously. Overnight, seven-day, and one-month standing lending facility rates were each trimmed by 10 basis points to 2.65%, 2.8% and 3.15%, respectively.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168-820x462.jpeg" alt="" class="wp-image-426848" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107261385-1687508402375-gettyimages-1080265094-octane_1_big0168.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Andriy Onufriyenko | Moment | Getty Images</figcaption></figure>



Bitcoin slipped sharply on Thursday evening, tumbling by as much as 9% to just over $26,000.



The cryptocurrency last traded at $26,593.68, reflecting a decline of more than 8%, according to Coin Metrics data.



The fall in bitcoin followed several hours after The Wall Street Journal reported that SpaceX, which is helmed by Elon Musk, wrote down the value of its bitcoin holdings by a total of $373 million in 2022 and 2021, and that the space travel company had sold the virtual currency.



“This is one of the most brutal minute-by-minute selloffs we’ve seen in the history of bitcoin,” Ryan Rasmussen, a researcher at&nbsp;Bitwise&nbsp;Asset Management, told CNBC. “The current speculation is it’s an Elon Musk/SpaceX-driven selloff.” He noted that this latest dramatic decline is “short-sighted and largely retail-driven.”



In 2022, Tesla, which Musk also leads as CEO, announced that it sold about 75% of its bitcoin holdings after investing $1.5 billion in the flagship cryptocurrency.



The billionaire executive has historically been a vocal supporter of crypto.



A recent study found that Musk’s mentions of certain altcoins on X, the social media site formerly known as Twitter, has boosted the prices of those cryptocurrencies. Back in 2021, speaking at “The B-Word” conference, Musk had also said “If the price of bitcoin goes down, I lose money. I might pump, but I don’t dump.”



Bitcoin had been under pressure earlier, starting after the Federal Reserve issued the minutes from its July policy meeting. In Thursday’s session, the cryptocurrency slumped to its lowest level in almost two months.



—CNBC’s Tanaya Macheel and Sarah Min contributed to this story.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371-820x462.jpeg" alt="" class="wp-image-426834" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107287880-1692248674321-gettyimages-1573491530-vcg111447162371.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. Federal Reserve Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on July 26, 2023 in Washington, DC. Chen Mengtong | China News Service | Getty Images</figcaption></figure>



The Fed’s still worried Federal Reserve officials are still worried that inflation could rise again, which would necessitate more interest rate hikes, according to minutes from the July meeting. Officials were also concerned that the decline of value in commercial real estate could affect banks and other financial institutions, sending ripples throughout the economy.



Losing streak U.S. markets fell for a second straight day and Treasury yields rose as traders digested hawkish minutes from the Federal Reserve. Asia-Pacific markets followed Wall Street lower Thursday. Australia’s S&amp;P/ASX 200 lost 0.53% as data showed the country’s seasonally adjusted unemployment rate climbing to 3.7% in July, higher than economists expected.



China’s 5% target China’s Premier Li Qiang said the country will work to achieve its economic growth target of around 5%, according to an official readout. At a meeting of China’s State Council, Li called for boosting domestic demand and consumption. Such stimulus will be welcome — analysts are thinking it’s increasingly likely China will miss its target this year.



Export troubles in Japan China’s sluggish economy is affecting the rest of Asia. Japan’s exports in July fell 0.3% year on year, their first monthly decline since February 2021. Weaker demand from China caused exports to the country to plunge 13.4%, the eighth consecutive monthly decline. Meanwhile, Japan’s imports slumped 13.5% as domestic demand faltered as well.



[PRO] European companies at risk Indeed, the weakness in China isn’t contained to the region. European companies with close ties to the world’s second-largest economy face risks too. CNBC Pro analyzed sales data and came up with a list of companies that rely significantly on China for their venue.



<h2 class="wp-block-heading" id="h-the-bottom-line"><a></a>The bottom line</h2>



The fight against inflation isn’t over. And there’s a risk interest rates have to go higher. That’s the key takeaway from minutes of the Fed’s July meeting.



Here are the exact words from the meeting summary: “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”



That wasn’t something markets wanted to hear. Investors think there’s a 60% chance rates will be at current levels at the end of the year, according to the CME FedWatch Tool. But they might have to revise their bets soon, especially since U.S. economic data is coming in hotter than expected.



“Recent third-quarter&nbsp;GDP estimates, coupled with fresh retail sales data, suggest a much more robust underpinning to the economy, certainly not what the Fed wants to see as they navigate the so-called ‘last mile’ towards achieving price stability,” said Quincy Krosby, chief global strategist for LPL Financial.



Longer-term U.S. Treasury yields — which are typically more sensitive to interest rate changes — rose in response to the minutes. The 10-year yield traded around 5 basis points higher at 4.258%, its highest closing rate in more than 15 years. The 2-year yield added nearly 4 basis points to hit 4.967%.



It wasn’t a pretty picture in the stock market as well. All three major indexes fell for their second consecutive session. The S&amp;P 500 declined 0.76%, the Dow Jones Industrial Average dropped 0.52% and the Nasdaq Composite slumped 1.15%. Both the S&amp;P and Nasdaq closed below their 50-day moving average.



But there might be a silver lining to the sell-off. “Valuations are becoming less and less extreme,” said Sam Stovall, chief investment strategist at CFRA Research.



That’s a good opportunity for investors to jump in on Big Tech stocks such as Nvidia and Tesla — provided the expectation that earnings have bottomed in the second quarter proves true. But given the hawkish slant of the Fed minutes, it might be a steeper trough to climb out of than previously thought

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="528" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-820x528.jpeg" alt="" class="wp-image-426778" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-820x528.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-300x193.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-140x90.jpeg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-768x495.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-1536x990.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107286045-1692027857415-gettyimages-1597500503-AFP_33R28E4-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Argentine far-right libertarian economist and presidential candidate Javier Milei celebrates the results of the primary elections with his sister Karina Milei at his headquarters in Buenos Aires on August 13, 2023. Alejandro Pagni | Afp | Getty Images</figcaption></figure>



Argentina’s central bank devalued its currency, the peso, by close to 18% and hiked its benchmark interest rate by a whopping 21 percentage points to 118% on Monday following a shock primary election win by far-right libertarian Javier Milei.



The moves were a bid by the government to calm markets in the wake of the Argentinian congressman’s surprise victory, which gave him the largest share of votes in the country’s presidential primary election at roughly 30%, far exceeding forecasts.



Markets had been betting on favorable results for moderate candidates. Argentina’s presidential election will be held in October.



Argentinian stocks and its sovereign dollar bonds were also lower Monday.



The central bank said Monday that the peso would be held at 350 to the dollar until the October vote.



Milei, riding on a wave of popular discontent, has vowed to get rid of the central bank and dollarize Argentina’s economy. He has also advocated for sharp spending cuts.



Latin America’s third-largest economy, Argentina has been mired in economic and financial crisis for years. The country’s foreign reserves are shrinking fast and its inflation is forecast at 142.4% for the year.



Argentina is on the brink of its sixth recession in a decade. Milei is a vocal critic of what he calls the corrupt political class, saying the country’s leaders have thrown it from one crisis to another. He believes replacing the peso with the dollar could calm inflation, but many economists warn that would trigger financial chaos.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture-820x462.jpeg" alt="" class="wp-image-426752" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/08/107285615-1691937285562-gettyimages-1251256675-China_Agriculture.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Chinese villagers growing rice seedlings in a paddy field in Qiandongnan, Guizhou Province, China on April 2023. Future Publishing | Future Publishing | Getty Images</figcaption></figure>



Global rice markets could come under further strain as the world’s leading rice producer China grapples with heavy rain and flood risks.&nbsp;



“Heavy rain in China’s grain-producing north-eastern region that will reduce yields is likely to put upward pressure on already high global rice prices,” Fitch Ratings said in a recent report.



China is the world’s largest producer of rice, and flood alert levels were raised for three provinces that account for 23% of the country’s rice output: Inner Mongolia, Jilin and Heilongjiang, the report pointed out.



The world’s second largest economy has been inundated by devastating floods in recent weeks. Typhoon Doksuri was one of the worst storms to hit northern China in years, with capital Beijing battered by the heaviest rainfall in 140 years. 



Fitch pointed out that many key grain production areas in those three provinces were affected by heavy rains and remnants of Typhoon Doksuri, and they’re set to face “another deluge as Typhoon Khanun moves north.”



The resulting soaked grain fields will reduce crop yields for the year, the Fitch report stated, although the full extent of the damage is not yet clear.



“This will lift China’s domestic grain prices and likely drive higher imports in 2H23 to partially offset the potential yield loss,” the credit ratings firm said, adding the country may need to look to import more rice if its own harvests fall short, and that could drive global rice prices even higher.



Global rice prices have surged to their highest in close to 12 years, according to the Food and Agriculture Organization All Rice Price Index. 



Other market watchers are estimating higher rice prices ahead after India banned non-basmati white rice exports last month, and Thailand urged farmers to plant less rice in a bid to save water as a result of low rainfall.



India, which accounts for more than 40% of global rice trade, banned exports of non-basmati white rice on July 20, as the government looked to tackle soaring domestic food prices.



Rice prices are hovering at decade highs, with rough rice futures last trading at $15.98 per hundredweight (cwt).



In addition to rice, the Fitch report also cited corn and soybean among major crops grown in Inner Mongolia, Jilin and Heilongjiang, which will be impacted by flood risks. China is expected to import more of both grains this year compared to the last.

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China’s central bank trims 1-year rate, but unexpectedly leaves 5-year rate unchanged

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Bitcoin abruptly tumbles as much as 9% to just over $26,000 late Thursday

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Argentina devalues its currency, jacks up interest rates after shock far-right primary win

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