Asian equities kicked off the week on a positive note as lower-than-expected in the U.S. consolidated the dovish Federal Reserve (Fed) expectations, while the People’s Bank of China (PBoC) announced more monetary stimulus after the country’s exports fell 1% in USD terms in August as a result of the escalating trade war with the U.S.
Chinese exports toward the U.S. tanked 16%. Chinese officials took additional stimulus measures as data started looking uglier. In addition to 50-basis-point nationwide RRR cut revealed earlier, the PBoC delivered 100-basis-point targeted cut for regional banks. The PBoC’s determination to fight the economic slowdown encouraged investors to buy stocks on Monday open, but gains remained timid.
The gained 0.36%; the (+0.39%) and the (+0.55%) shyly followed, as Japan’s growth fell to 1.3% y-o-y in the second quarter, as broadly priced in. U.S. equity futures recorded limited gains as well; the (+0.20%), (+0.19%) and (+0.20%) edged marginally higher.
Energy stocks (-0.24%) traded under pressure in Sydney, while technology stocks outperformed across the board.
(+0.19%) and futures (+0.35%) hint at a positive open in Europe.
The is expected to challenge the 7300p in early trading.
Fed to cut 25bps, ECB to cut 10bps or more
Negative vibes of the escalating trade war were felt across the Pacific Ocean, as well. Friday’s payrolls data showed that the U.S. economy added 130,000 nonfarm jobs in August, well below the 160,000 expected by analyst. Though the average earnings rose to 0.4% m-o-m from 0.3% printed a month earlier, as the participation rate improved.
The U.S. yield came off the 1.60% high, but the Fed expectations remained broadly unchanged. Investors expect a at this month’s FOMC meeting, but not more.
Doves will rather be flying over the European Central Bank (ECB) this week. Rising trade tensions, weakening global demand and