Asian stock markets mostly rise as China rate cut offsets cut in estimated US growth
Asian stock markets were mostly higher Monday as a weekend interest rate cut by the Chinese central bank lifted sentiment following the release of lackluster U.S. growth data.
KEEPING SCORE: Japan's Nikkei 225 gained 0.3 percent to 18,847.19 and South Korea's Kospi added 0.2 percent to 1,989.27. Hong Kong's Hang Seng Index rose 0.3 percent to 24,898.25 and the Shanghai Composite Index advanced 0.4 percent to 3,322.23. Australia's S&P ASX/200 jumped 0.9 percent to 5,981.20. Southeast Asian markets were mixed.
CHINA RATE CUT: The People's Bank of China cut interest rates for the second time in three months Saturday, reducing the rate for one-year loans by commercial banks by 0.25 percentage point to 5.35 percent. The interest rate paid on a one-year deposit was lowered by 0.25 point to 2.50 percent. The latest round of cuts follow a string of tax reductions and other measures aimed at propping up growth. The government cut business taxes last week and has announced a pay hike for civil servants.
THE QUOTE: "News of China's rate cut should help buyer mood this morning, compensating for a weak lead from the US market," said Ric Spooner, chief market analyst at CMC in Sydney. "However, while news of lower borrowing costs will help support equity valuations and be seen as a positive for commodity demand, market response may be limited. In some senses this rate cut is a technical response to the fact that lower inflation is making real borrowing costs more expensive in China. "
US PROSPECTS: U.S. GDP growth in the fourth quarter was revised down to 2.2 percent from an earlier estimate of 2.6 percent. The revised pace is on a par with the average of the past five years and indicative of a less robust recovery than some analysts had believed. That news countered upbeat data on housing and consumer confidence.
WALL STREET: The Dow Jones industrial average slipped 82 points, or 0.5 percent, to 18,132 on Friday. The Standard & Poor's 500 fell six points, or 0.3 percent, to 2,104. The Nasdaq lost 24 points, or 0.5 percent, to 4,963. The S&P 500 ended February with a gain of 5.5 percent, its best month since October 2011.
ENERGY: Benchmark U.S. crude oil was down 34 cents to $49.42 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.59 on Friday to $49.76 a barrel. Brent crude, a key indicator for global oil prices, fell 42 cents to $62.16 a barrel in London.
CURRENCIES: The dollar rose to 119.81 yen from 119.63 late Friday. The euro edged lower to $1.1171 from $1.1199.