Asian stocks held steady as investors awaited upcoming central bank meetings, which are expected to result in two additional rate cuts. Key U.S. inflation data is also anticipated to signal further easing measures.
In a surprise move, China’s central bank lowered its 14-day repo rate by 10 basis points, just days after disappointing markets by not cutting longer-term rates. This action helped lift Chinese blue-chip stocks by 0.5%.
A holiday in Japan led to lighter trading volumes, with MSCI’s broad index of Asia-Pacific shares (excluding Japan) rising by 0.2%, following a 2.7% jump last week.
While Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng Index gained 0.4% to 18,325.53, and Shanghai’s Composite Index edged up 0.2% to 2,743.11.
China’s central bank also injected 14-day cash into its banking system for the first time in months at a reduced interest rate, signaling further easing of monetary policy. The People’s Bank of China provided 234.6 billion yuan (£25 billion) via open market operations, aiming to ensure sufficient quarter-end liquidity at a reasonable level within the banking system.
This liquidity injection comes ahead of China’s National Day holidays starting on October 1, aligning the 14-day repo rate with the seven-day repo rate, which was cut in July.
Meanwhile, Wall Street closed with mixed results on Friday. A Federal Reserve official expressed optimism that inflation is decreasing, raising hopes for additional rate cuts. The S&P 500 dipped 0.2%, while the tech-focused Nasdaq 100 dropped as much as 1% during the day.
