Asian Equities Higher after China Rate Cut

Asian stocks rose for a second day after China cut interest rates for the third time in six months and U.S. shares jumped following an official jobs report.

The MSCI Asia Pacific Index added 0.6 percent to 152 as of 9:01 a.m. in Tokyo. China is bolstering stimulus amid subdued inflation and a weak trade profile, signs Asia’s largest economy may struggle to reach its annual growth target of about 7 percent. The Standard & Poor’s 500 Index gained 1.4 percent Friday after a rebound in U.S. hiring last month bolstered optimism that the economy is recovering, but not fast enough to warrant raising interest rates in June.

“Given that China’s growth and inflation are below targets, additional stimulus seems to be the right response,” Steven Milch, chief economist at Suncorp Wealth Management in Sydney, said by phone. “Versus bonds, equities don’t look stretched but if you look at PE ratios on some markets, whether it’s the U.S. or Australia, you could conclude that the markets are above fair value. Some of that has been corrected in the last couple of weeks. Equity markets may look above fair value but not excessively so.”


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