Asian markets began the week on a mixed tone Monday, as traders considered Chinese central bank interest rate cuts aimed at reviving the world’s second largest economy.
Meanwhile, geopolitical fears drove gold to a record high.
Another record day on Wall Street on Friday failed to spark a similar bounce at the start of the week, with traders also preparing for the latest firm earnings season.
The People’s Bank of China said it had cut two key interest rates to all-time lows as part of a push by authorities to boost expenditure and meet its 5% annual economic growth objective.’
The move follows data released last week that showed the economy expanded at its slowest quarterly rate since the beginning of 2023, but still better than expected.
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, stated that “monetary policy has clearly shifted to a more supportive stance since the press conference on September 24.” “China’s real interest rate is too high.”
Friday’s economic growth reading came amid news that retail sales and industrial output increased more than predicted in September, bringing some relief following a spate of disappointing data on a variety of measures like as inflation, investment, and trade.
Since last month, Beijing has launched a slew of measures to resuscitate the economy, notably the real estate sector, including rate cuts, loosening of home-buying laws, and commitments to assist stock markets.
The announcements sparked a massive spike in mainland and Hong Kong equities, but part of those gains have already been lost following a series of disappointing news conferences that failed to provide any clarity or meaningful actions.
“Officials are gradually ramping up support to kick-start the economy — but the will-they-won’t-they of announcements has made the process a rollercoaster for markets,” said analysts at Moody’s Analytics.
“The latest supports are very welcome. And they’re likely to propel the economy to its ‘around 5%’ target for the year. But more is required if officials are to address the structural challenges in the economy.”
Since last month, Beijing has launched a slew of measures to resuscitate the economy, notably the real estate sector, including rate cuts, loosening of home-buying laws, and commitments to assist stock markets.
The announcements sparked a massive spike in mainland and Hong Kong equities, but part of those gains have already been lost following a series of disappointing news conferences that failed to provide any clarity or meaningful actions.
Hong Kong fell more than 1% after rising more than 3% on Friday, but Shanghai edged higher.
Tokyo, Singapore, Manila, Bangkok, and Mumbai all decreased, while Sydney, Seoul, Wellington, Taipei, and Jakarta rose.
London opened higher, but Paris and Frankfurt were also lower.
Wall Street had given investors a solid lead, with the Dow and S&P 500 setting new highs, aided by strong profits from Netflix and positive reports on Apple’s iPhone sales in China, which lifted the large tech sector.
Safe-haven gold prices rose to an all-time high of $2,732.82 on rumors that Israel is planning retribution against Iran following Tehran’s missile bombardment this month, while word that a Hezbollah drone burst near Prime Minister Benjamin Netanyahu’s residence heightened tensions.
However, oil prices remained unchanged after falling more than 8% last week due to economic uncertainties in China, the world’s largest importer of the commodity.
