China's surprise interest rate cut spurred Asian indices on Monday, mirroring a positive session on Wall Street last Friday.
In an unexpected move after the Shanghai Composite index closed for the week, the People's Bank of China cut its benchmark interest rate on Friday for the first time in over two years to support its cooling economy. The one-year benchmark lending rate was trimmed by 40 basis points to 5.6 percent, while one-year benchmark deposit rates were lowered by 25 basis points; the move is effective from November 22.
"[Taking it at] face value, the rate cut is intended to keep Chinese monetary policy neutral. With inflation falling, the real interest rate is more or less unchanged from a year ago," Bill Adams, Senior International Economist at PNC, told CNBC's "The Rundown."
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Last Friday, U.S. stocks ended the week at highs as markets rallied on central bank stimulus efforts and an encouraging domestic outlook. Also helping sentiment were comments from European Central Bank (ECB) President Mario Draghi, who reiterated dovish statements in a speech at a European banking conference in Frankfurt on Friday. Later in the day, the ECB announced that it has begun buying asset-backed securities.
Meanwhile, Japan's stock market was closed for the Labor Thanksgiving Day.