Asian stocks rebound after one-year low, China benefits from monetary easing

People wearing protective masks, amid the coronavirus disease (COVID-19) outbreak, are reflected on an electronic board displaying Japanese stock prices outside a brokerage house in Tokyo, Japan , October 5, 2021. REUTERS / Kim Kyung-Hoon

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SINGAPORE, Dec. 7 (Reuters) – Asian stocks rallied on Tuesday amid fading concerns about the impact of the Omicron variant as Chinese markets were supported by the easing of monetary policy from the central bank.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) rose 1.3% and was on track for its biggest jump in two months, after falling to its lowest on Monday level in one year.

Euro Stoxx 50 futures were up 0.5% and FTSE futures were up 0.08% early in trading, indicating a firm open market after European stocks ended higher on Monday.

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China’s CSI300 Index (.CSI300) gained 0.6% and the Hong Kong Hang Seng Index (.HSI) rose 1.7% as the central bank freed up $ 188 billion in liquidity from a relaxation of its policy. Read more

“With this reduction, policymakers are showing a more aggressive approach to preventing a total collapse of the real estate market,” said David Chao, global market strategist for Asia-Pacific, ex-Japan, at Invesco in a note. .

The People’s Bank of China on Monday said it would reduce the amount of liquidity banks must hold in reserve, its second such move this year, freeing up funds with long-term liquidity to support slowing economic growth.

China is in a mid-cycle slowdown and reducing the RRR is exactly what the economy needs to get back on track, Chao said. “It is possible that further RRR cuts will be planned over the next year to stabilize growth,” he added.

Elsewhere, Australia’s S & P / ASX200 (.AXJO) rose 0.95%, while Japan’s Nikkei (.N225) rose 2.1% as risk sentiment pushed markets to the rise.

MSCI’s main benchmark in Asia ex-Japan has lost around 5% so far this year, with Hong Kong markets among the big losers, while Indian (.BSESN) and Taiwanese (.TWII) stocks have fallen. outperformed.

Shares of struggling developer Evergrande (3333.HK) edged up 1.7% after hitting a record low on Monday as markets waited to see if the real estate giant paid $ 82.5 million with a 30-day grace period ending.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

“While epidemiologists have rightly cautioned against premature conclusions on Omicron, markets arguably assumed that last week’s sharp sell-off should have been more subdued,” said Vishnu Varathan, chief economy officer. and strategy at Mizuho Bank, in a note.

“After all, the first evaluations of Omicron’s cases were declared mild, causing half-full relief.”

Omicron has spread to about a third of U.S. states, but the Delta version accounts for the majority of COVID-19 infections in the United States, health officials said on Sunday. Read more

Dr Anthony Fauci, America’s top infectious disease official, told CNN it doesn’t appear Omicron has a “great degree of seriousness.”

Wall Street shares closed higher on Monday.

The risky mood also helped the dollar rise against safe haven currencies such as the Japanese yen, which lost 0.6% overnight, while the risk-prone Australian dollar found buyers as well.

The dollar was also supported by the expectation that the Federal Reserve will accelerate the reduction in its bond buying program at its meeting next week in response to the tightening labor market.

Oil prices rose, consolidating a nearly 5% rebound the previous day as concerns over the impact of the Omicron variant on global fuel demand eased.

Brent crude futures contracts strengthened 0.9% to $ 73.7 a barrel, after leveling off up 4.6% on Monday.

Gold prices remained stable at $ 1,778.5 per ounce, in line with expectations. US consumer price data due later this week will show inflation accelerating.

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Reporting by Anshuman Daga; Editing by Sam Holmes and Lincoln Feast.

Our Standards: Thomson Reuters Trust Principles.

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