Most Asian stocks saw gains on Friday, with Chinese shares surging to a two-month high following the central bank’s promise to implement interest rate cuts. However, broader regional gains were capped by growing concerns over escalating trade tensions.
Chinese Stocks Jump on PBoC Rate-Cut Pledge
China’s Shanghai Composite surged 1.5% on Friday, reaching its highest level since December 31, 2024, while the Shanghai Shenzhen CSI 300 index climbed 2.2%. Hong Kong’s Hang Seng index also saw a solid rise of 1.9% at 03:08 GMT.
In response to growing economic pressures, China’s central bank, the People’s Bank of China (PBoC), announced plans on Thursday to introduce additional monetary tools to stimulate growth. The measures include potential interest rate cuts and efforts to stabilize the yuan amid a challenging global economic environment. The central bank intends to use the seven-day reverse repo rate as its main policy instrument, signaling a move towards more market-driven liquidity management.
These developments come in the face of deflationary pressures, weak household demand, and ongoing trade tensions with the U.S. China’s annual parliamentary meeting “Two Sessions,” which concluded on March 11, set a 5% GDP growth target for 2024, alongside pledges for pro-business reforms, increased fiscal stimulus, and support for the property sector.
This optimism surrounding China’s economic policy spilled over into other regional markets, driving broader gains.
- Australia’s S&P/ASX 200 rose 0.4%.
- The Philippines’ PSEi Composite gained 0.5%.
- Japan’s Nikkei 225 advanced 0.4% due to a weaker yen.
- TOPIX rose 0.5%.
Markets in India remained closed for a public holiday.
Investors Cautious as Trump Trade War Heats Up
U.S. President Donald Trump increased trade tensions on Thursday, warning of a 200% tariff on European alcoholic beverages, including wines and champagnes, if the EU moved forward with a planned 50% tariff on American whiskey. The EU’s tariff is scheduled to take effect on April 1, in response to the U.S.’s recent 25% tariffs on imported steel and aluminum.
As tariffs disrupt global supply chains, Asian economies—many of which rely heavily on exports to both the U.S. and Europe—are feeling the effects. South Korea’s KOSPI remained largely unchanged, while Indonesia’s Jakarta Stock Exchange Composite Index slipped 1%.
The threat of a worsening trade war, particularly between the U.S. and the EU, remains a significant concern for investors, limiting the broader market upside in the region.
Related topics: