Logo of Phnom Penh Post newspaper Phnom Penh Post - Asian markets upbeat after China easing move

Asian markets upbeat after China easing move

Content image - Phnom Penh Post
Investors rest on a chair in front of screens showing stock market movements at a securities company in Beijing. Chinese shares had their best week since June 21. AFP

Asian markets upbeat after China easing move

Most Asian markets started on 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 (Fed) will cut interest rates this month.

The People’s Bank of China (PBoC) 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 US 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 on Friday it will “continue to act as appropriate to sustain this expansion”, while noting

“significant risks” to growth.

Tokyo ended 0.6 per cent higher, Shanghai added 0.8 per cent and Seoul jumped 0.5 per cent. Singapore and Taipei each added 0.2 per cent, while Sydney was marginally higher. There were also gains in Mumbai, Jakarta, Bangkok and Manila. The Cambodia Securities Exchange index rose 0.07 per cent.

Johnson’s tough week

Hong Kong was marginally down with gains offset by profit-taking after last week’s surge as well as ongoing worries about months-long protests in the city following another weekend of violence.

In early trade London rose 0.4 per cent, Paris was flat and Frankfurt gained 0.3 per cent.

Neil Wilson, chief market analyst at Markets.com, warned: “With central banks refilling the punch bowls, markets can shrug off the weakening economic data and put off the coming dawn for another hour. The party goes on for now, but it’s looking increasingly precarious.”

Traders will turn their attention back to Westminster, where members of Parliament (MPs) are expected to pass a bill preventing Prime Minister Boris Johnson from taking Britain out of the EU 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 [Prime Minister] 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 more than one per cent on the Chinese monetary easing as well as hopes for US trade talks, while a meeting this week of top producers from the Organisation of the Petroleum Exporting Countries and some non-members will be pored over for signs of further output cuts.

MOST VIEWED

  • Man Covid-19 positive after Thailand trip

    The Ministry of Health on Saturday reported the third Covid-19 case in less than two weeks, bringing the total to 125. The man, a 26-year-old from Tbong Khmum province's Tbong Khmum district, arrived at the O'Beichoan border checkpoint in Banteay Meanchey province on Thursday. He is

  • Kingdom's GDP growth to narrow -1% to -2.9%, World Bank says

    The World Bank expects further recoil on Cambodia’s gross domestic product (GDP) growth to between minus one per cent and minus 2.9 per cent for 2020 as its main growth drivers – tourism, manufacturing exports and construction – take a beating due to Covid-19, its latest economic update

  • Vietnam: Tougher sentences for child abusers

    Several National Assembly (NA) deputies in Vietnam are calling for tougher penalties to be handed down to child abusers. They hope stricter punishments will act as a strong deterrent to prevent offenders committing further offences in the future. Extreme measures such as chemical castration were

  • Central bank to shun small US banknotes

    The National Bank of Cambodia (NBC) is considering not accepting smaller denominated US dollar banknotes – $1, $2 and $5 – from banks and microfinance institutions (MFIs) which it said are flooding its stockpile as the demand for those notes is low. While some banking insiders welcomed the move as

  • PM lauded in Covid-19 fight

    World Health Organisation (WHO) director-general Tedros Adhanom Ghebreyesus sent a letter to Prime Minister Hun Sen thanking him for following the WHO’s guidance and commending Cambodia’s efforts in the fight against Covid-19. In his letter made public by the Ministry of Foreign Affairs

  • Workers return, hope for salaries

    More than 600 factory workers in the capital’s Chaom Chao commune in Por Sen Chey district returned to work after the factory’s owner promised to pay their salaries in instalments until the middle of next month. On Tuesday and Wednesday, more than 600 workers gathered