Regional blue chip stocks commenced trading with strong note, following gain in major markets in the United States, the United Kingdom, and Europe on last Friday in response to increased global stimulus.
China reduced interest rates last week, joining the European Central Bank and the Bank of Japan in deploying fresh stimulus. That contrasts with the Federal Reserve, which has ended its bond-buying program as the U.S. economy strengthens.
The People's Bank of China surprised the market by cutting its benchmark lending rate by 0.40% to 5.6%, the first reduction since July 2012. The deposit rate was cut by a smaller 0.25% to 2.75%.
There are also rumour that China's leadership and central bank are ready to cut rates again and loosen lending restrictions amid concerned that falling prices could trigger a surge in debt defaults, business failures and job losses.
Later on Friday, European Central Bank president Mario Draghi said it was preparing to broaden its stimulus to beat low inflation, renewing expectations for a new round of quantitative easing to support global liquidity.
Draghi caused a stir when he said Friday the bank is willing to "step up the pressure." If current efforts do not achieve the desired effect, Draghi said the ECB could "broaden even more the channels through which we intervene."
Among Asian bourses
Aussie market bounces 1.08%
Australian share market closed higher, as investors chased for bottom fishing following last week selloff and as the prospect of further policy stimulus in China and Europe. Most of the ASX sectoral indices climbed up, with shares of beaten-down iron ore miners posted their strongest day today after an unexpected interest rate cut in China late on Friday. The S&P/ASX 200 index closed 57.50 points, or 1.08%, higher at 5361.80, after falling 2.8% last week. The broader All Ordinaries index rebounded 56.90 points, or 1.08%, to 5349, after suffering loss of 2.6% prior week.
Shares of materials and resources companies surged sharply, on news of a Chinese interest rate cut. Resources giant BHP advanced 3.8% to A$32.90 after the company unveiled new plans to cut $1 billion of costs in the 2016 financial year, and unveiled a management shake-up before next year's spinoff of non-core assets. Rio Tinto, Australia's biggest iron ore miner, gained 3.4% to A$58.30. Fortescue Metals Group, the third-largest exporter of the steel-making commodity, jumped 10.8% to A$2.98. BC Iron was up 6.25% to 59.5 cents. The energy sector was another source of strength for the market, with Santos up 4.3% at A$12.45, Oil Search up 1.5% at A$8.70 and Woodside Petroleum 1.6% higher at A$39.46.
The major banks were also higher, but with more moderate gains. Westpac Banking Corp rose 0.8% to A$32.50, while Commonwealth Bank of Australia and National Australia Bank each rose 0.4% to A$80.42 and A$32.40 respectively. ANZ Banking Group climbed up 0.2% to A$31.87, as Bell Potter's Charlie Aitken upgraded its rating for the lender to "Buy" citing the bank's south-east Asian business is set to benefit from lower interest rates in China.
Shanghai Composite hits to three-year high
Mainland China share market closed sharp higher in heavy trade, as an unexpected interest rate cut by China's central bank has whetted appetite for risk assets. The Shanghai Composite spurted 46.09 points, or 1.85%, to 2532.88 at the close, the highest close since Sept. 1, 2011. Full-day turnover was 330.29 billion yuan, more than double from last Friday's 150.80 billion yuan.
The People's Bank of China rate cut announcement came after market hour on Friday. China's central bank cut its key lending rate by 0.40% to 5.6%, the first reduction in two years. The deposit rate was cut by a smaller 0.25% to 2.75%. The central bank move followed a string of reports showing the economy and especially property continues to slow and is heading for its weakest annual growth rate in 25 years at around 7%. The final straw may have been the news last week that activity in China's huge manufacturing sector surprisingly slowed at the start of this month to a six month low.
The nine of ten SSE sectoral indcies advanced, with materials issue being major gainer, up 2.83%, followed by industrial up 1.82%, financial up 2.77%, utilities up 2.09%, consumer discretionary up 1.99%, energy up 1.98%, technology up 1.71%, telecom up 1.24% and consumer stples up 0.63%.
HK Stocks surges after China surprise rate slash
Hong Kong share market closed sharply higher in heavy trade, as appetite for riskier assets stimulated after the Chinese central bank announced a surprise rate cut Friday night. The Hang Seng Index ended higher by 456.02 points, or 1.95%, to 23893.14, off an intra-day high of 23936.34 and low of 23823.56. Turnover rose to HK$105.25 billion from HK$71.08 billion on last Friday.
Shares of mainland Chinese banks and property developers both went sharply higher after the People's Bank of China's reduction of the benchmark one-year deposit and lending rates by 25 basis points and 40 basis points, respectively. Among major banks, China Minsheng Banking Corp., climbed 3.9% to HK$7.97, China Merchants Bank Co., advanced 3.2% to HK$14.98, and Industrial and Commercial Bank of rose 2.4% to HK$5.08.
Property shares gained even more, with China Vanke Co., soaring 13.3% to HK$15.70, China Overseas Land & Investment surging 11% to HK$22.65, Country Garden Holdings Co. spiking 10.5% to HK$3.16, China Resources Land leaping 10.4% to HK$19.18, and Poly Property Group Co. improving 8.8% to HK$3.10.
Insurance players were also higher as mainland stock market surged. China Life (02628) and Ping An (02318) rose 8.5% and 5.4% to HK$24.95 and HK$61.95. CPIC (02601) soared 8.2% to HK$30.85.
Sensex, Nifty hit all-time highs
Indian stock market closed the session sharp higher today, as risk appetite buoyed after the prospect of further policy stimulus in China and Europe, while expectations of more reforms during the ongoing winter session of Parliament also helped. The Sensex provisionally closed 0.58% higher at 28499.54 after earlier surging to an all-time high of 28,541.96. The Nifty ended up 0.62% to 8530.15, coming off a life high of 8,534.65 hit earlier in the session.
Among BSE sectoral indices, IT index gained the most by 1.86%, followed by metal 1.64%, realty 1.62% and TECk 1.4%, while oil & gas (down 0.73%), healthcare (-0.45%) and FMCG (-0.25%) indices lost investors' support.
Tata Power, Hindalco, Infosys, Tata Steel and ICICI Bank were the top five gainers among 30-share Sensex constituents, while the major losers were Cipla, Reliance, ONGC, Tata Motors and Bharti Airtel.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.34% to 9122.33. South Korea KOSPI was up 0.7% to 1978.54. New Zealand's NZX50 fell 0.44% to 5471.68. Singapore's Straits Times index fell 0.14% at 3340.53. Malaysia's KLCI grew 1.36% to 1833.77. Indonesia's Jakarta Composite index rose 0.58% to 5141.76. Japanese markets are closed for a holiday.
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