HONG KONG, Sept 9, 2019 (BSS/AFP) – Most Asian markets started Monday on a
positive note to build on last week’s gains after China unveiled fresh
stimulus measures and below-par US jobs data reinforced expectations the
Federal Reserve will cut interest rates this month.
The People’s Bank of China on Friday said it would slash the amount of
cash lenders must keep in reserve to its lowest level in 12 years, freeing up
more than $100 billion for the stuttering economy.
The announcement came two days ahead of the release of figures showing a
contraction in imports and exports as the trade war with the United States
bites deeper, with speculation that further measures could be on the way.
“Concerns of a more protracted trade war have already sapped business
confidence in China and any way you want to slice and dice the data at the
end of the day it makes for a convincing argument for the PBoC to turn on the
monetary taps,” said Stephen Innes, Asia-Pacific market strategist at
AxiTrader.
Asian investors were broadly upbeat on the move, while a weaker-than-
forecast reading on US jobs creation increased the chance the Fed will reduce
borrowing rates again at its policy meeting this month.
The news suggested the world’s number-one economy was also feeling the
pinch from the trade row and the bank’s boss Jerome Powell said in a speech
Friday it will “continue to act as appropriate to sustain this expansion”,
while noting “significant risks” to growth.
Tokyo ended the morning 0.5 percent higher, Shanghai added 0.4 percent in
the morning and Seoul jumped 0.6 percent. Sydney, Singapore and Taipei each
added 0.1 percent while there were also gains in Jakarta and Manila.
– Johnson faces tough week –
Hong Kong rose 0.2 percent but gains were tempered by profit-taking after
last week’s surge as well as ongoing worries about months-long protests in
the city, with fresh violence over the weekend.
Traders will turn their attention back to Westminster, where MPs are
expected to pass a bill preventing Prime Minister Boris Johnson from taking
Britain out of the European Union without a divorce agreement. Most
economists have warned that a no-deal Brexit would hammer the economy.
The pound has enjoyed a rally since the new premier last week saw a number
of his own party members help inflict a succession of parliamentary defeats
that took control of the agenda out of his hands.
“Having failed to overturn the bill, fired… (nearly) 30 of his own MPs
and failed to lure Labour (the opposition) into an early election, PM
Johnson’s next move will be to challenge the bill’s legality in court while
Parliament is in suspension,” said Jeffrey Halley, senior market analyst at
OANDA.
“He may sell it as all part of his cunning Brexit plan; the rest of the
world will likely view it as a desperate rear-guard action.”
Johnson’s future has already been called into question less than two
months after taking over at 10 Downing Street, and he suffered another blow
at the weekend when one of his top cabinet ministers resigned in protest over
his handling of the Brexit crisis.
On oil markets, both main contracts rose on the Chinese monetary easing as
well as hopes for US trade talks, while a meeting this week of top producers
from OPEC and some non-members will be pored over for signs of further output
cuts.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.5 percent at 21,305.89 (break)
Hong Kong – Hang Seng: UP 0.2 at 26,735.25
Shanghai – Composite: UP 0.4 percent at 3,012.07
Pound/dollar: UP at $1.2282 from $1.2246 at 2200 GMT
Euro/pound: DOWN at 89.74 pence from 90.65 pence
Euro/dollar: DOWN at $1.1022 from $1.1097
Dollar/yen: UP at 106.96 yen from 106.95 yen
West Texas Intermediate: UP 56 cents at $57.08 per barrel
Brent North Sea crude: UP 46 cents at $62.00 per barrel
New York – Dow: UP 0.3 percent at 26,797.46 (close)
London – FTSE 100: UP 0.2 percent at 7,282.34 (close)