Asian shares up after China rate cut

<p>Markets in Asia reacted with caution to China’s surprise interest rate cuts.</p>

Shares in Asia rose today (October 26th) following an expected move from the People’s Bank of China, who announced late on Friday it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35 per cent, while the one-year deposit rate would fall to 1.5 per cent from 1.75 per cent.

The bank also removed the ceiling on deposit rates in a bid to boost competition between Chinese banks. The amount of money banks must hold in reserve was also cut by 50 basis points for all banks.

"The market was slightly buoyed by the central bank’s rate cut. Medium and small companies, and securities companies were relatively dynamic," Zhang Qi, an analyst at Haitong Securities in Shanghai, told The Guardian.

"But the market appeared to be in correction after it rose a lot in October, and some investors sold stocks on the short-lived rise from the rate cuts. So overall, the market stayed stable today," he added.

Tokyo's Nikkei 225 index gained 0.7 per cent to 18,963.53, China's Shanghai Composite Index rose 0.7 per cent to 3,437.58 and South Korea's Kospi edged up 0.1 per cent to 2,043.50. Hong Kong's Hang Seng was down 0.1 per cent to 23,125.94 and Australia's S&P/ASX 200 dipped 0.1 per cent to 5,348.00. 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.