Oct 26, 2015 12:12 AM
Asian stock markets higher after China interest rate cut
The Associated Press
BEIJING (AP) Asian stock markets rose Monday after China cut interest rates and expectations grew that other major central banks will maintain or expand already extensive monetary stimulus.
KEEPING SCORE: Tokyo's Nikkei 225 index jumped 1.2 percent to 19,052.73 and China's Shanghai Composite Index gained 0.8 percent to 3,440.65. Hong Kong's Hang Seng rose 0.3 percent to 23,219.95 and Australia's S&P/ASX 200 added 0.3 percent to 5,367.60. South Korea's Kospi advanced 0.1 percent to 2,043.43. Taiwan, Singapore and Indonesia also rose.
CHINA RATES: Beijing cut interest rates Friday for a sixth time since last November to prop up economic growth that slowed to a six-year low of 6.9 percent in the latest quarter. The People's Bank of China also expanded the pool of money available for lending by reducing the minimum reserves banks must hold. Analysts said the rate cut should help put a floor under sinking growth. But they warned that with Chinese debt levels already relatively high, the impact of more reductions will be limited.
ANALYST'S TAKE: "As underlying growth slows, China's authorities are likely to respond with additional stimulus," said Moody's Investors Service in a report. "We expect the ongoing economic slowdown to continue," it said. "Additional monetary and fiscal stimulus will keep growth from slowing more rapidly, rather than raising growth to significantly higher levels."
CENTRAL BANKS: The U.S. Federal Reserve board meets this week but expectations of a rate increase are declining due to weak global growth. Last week, the head of the European Central Bank suggested it might extend its $1.2 trillion bond purchase program or take other measures to stimulate the Eurozone's economy. There are also expectations the Bank of Japan will expands its monetary stimulus. "No one expects the Fed to budge this week and odds of even a December move are now barely one-third, according to the Fed fund futures," said DBS Group in a report.
WALL STREET: U.S. stocks rose Friday after strong earnings from big-name technology companies. The market has been gradually regaining ground following a swoon in August and September. Microsoft vaulted to a 15-year high, while Amazon and Google's parent company Alphabet closed sharply higher. The Dow Jones industrial average rose 0.9 percent, the Standard & Poor's 500 added 1.1 percent and the Nasdaq composite gained 2.3 percent.
CURRENCIES: The dollar declined to 121.11 yen from Friday's 121.46 yen. The euro edged up to $1.1039 from $1.1018.
ENERGY: Benchmark U.S. crude gained 13 cents to $44.73 per barrel in electronic trading on the New York Mercantile Exchange. The contract soared $1.22 on Friday to close at $44.60. Brent crude, used to price international oils, added 15 cents to $48.14 in London. The contract gained $1.91 the previous session to $44.79.