Asian shares rose on Monday as investors cheered China’s latest cut to interest rates to bolster its flagging economy and as Wall Street rallied after a robust headline reading for U.S. employment. China cut interest rates for the third time in six months on Sunday, and analysts predicted policymakers would relax reserve requirements and cut rates again in the coming months.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.5 percent in early trade, moving away from a one-month low touched on Friday. Japan’s Nikkei share average .N225 added 1.3 percent. The People’s Bank of China cut its benchmark, one-year lending rate by 25 basis points to 5.1 percent from Monday, and its benchmark deposit rate by the same amount to 2.25 percent.
“In light of the recent economic slowdown and rising disinflationary pressures, further policy easing including reserve ratio and rate cuts will still be warranted in the coming months,” strategists at HSBC wrote in a note to clients. The easing followed Chinese inflation figures on Saturday that added to concerns about deflationary pressures.