Asian Stocks Climb; China Gains from Repo Rate Cut, Australia Faces Retailer Losses

Most Asian stocks experienced a slight uptick on Monday, buoyed by ongoing optimism surrounding lower interest rates. However, Australian markets lagged due to significant declines in major retail stocks following an antitrust lawsuit.

Chinese markets gained following a rate cut from the People’s Bank of China (PBOC) on short-term lending, though overall increases were modest. Trading volumes in the region were dampened due to a public holiday in Japan, and a lackluster close on Wall Street the previous Friday did not provide strong cues, despite U.S. stock index futures rising during Asian trading hours.

Asian markets have benefitted from substantial increases in the prior week, with sentiment largely driven by an interest rate cut from the Federal Reserve, indicating the start of an easing cycle.

Investors are on the lookout for significant indicators from the U.S. regarding the Fed’s future direction as several officials are scheduled to speak this week, along with the release of key inflation data.

Chinese Markets React to Repo Rate Cut

The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes increased by 0.5% and 0.4%, respectively, while Hong Kong’s Hang Seng index rose by 0.7%. The PBOC’s decision to reduce its 14-day reverse repo rate from 1.95% to 1.85% aims to loosen monetary conditions further and stimulate economic growth.

This rate reduction came shortly after the PBOC’s decision to keep its benchmark loan prime rate unchanged, a move that disappointed market expectations. Notably, Chinese indexes remain just above the seven-month lows reached earlier in September, and investors have been urging the government to implement more stimulus measures as signs of economic recovery are scarce.

Losses in Australian Stocks and RBA Meeting Anticipation

In contrast, Australia’s ASX 200 index was the worst performer in the region, dipping 0.6% from its record highs. Significant losses were seen among supermarket giants Woolworths and Coles Group, which both dropped by 3% to 4% after Australia’s competition regulator filed a lawsuit accusing them of misleading customers regarding discounts.

General sentiment towards Australia was cautious ahead of a Reserve Bank of Australia (RBA) meeting on Tuesday. While no interest rate hikes are anticipated, a hawkish tone is expected due to ongoing strength in the labor market and persistent inflation.

Overall, broader Asian markets were on the rise amid the positive sentiment surrounding lower interest rates. Futures for the Nikkei 225 increased by 0.9% as local markets remained closed for a holiday, while South Korea’s KOSPI gained 0.1%. Additionally, futures for India’s Nifty 50 index indicated a positive opening, with the index aiming for record highs at the 26,000-point mark.