Asian stock markets mostly advanced on Monday, taking heart from a positive lead from Wall Street and as China rolled out its third interest rate cut since November.
On Sunday, the People's Bank of China (PBOC) announced a cut in its benchmark lending rate and one-year deposit rates by 25 basis points, effective on May 11, as growth in the Asian economic giant slowed to levels not seen since the global financial crisis.
While fresh policy support largely bolstered sentiment in Asia, some analysts fear that more aggressive cuts in the interest rates and reserve requirement ratio (RRR) indicate that the slowdown in the mainland may be larger than authorities had initially expected.
"The cut announced over the weekend justifies my view that China falls behind the curve in terms of controlling the slowdown. Everyone calls it engineered slowdown, but when you see how the duration of the interest rate cut has been compressed and how the RRR cut has been made at a more aggressive pace, it seems to me that China is catching up with the curve, rather than being fully in control," Nizam Idris, MD and head of Strategy, Fixed Income & Currencies at Macquarie, told CNBC's "Street Signs Asia."
U.S. stocks finished sharply higher end of last week as investors welcomed a "Goldilocks" jobs report. April's U.S. nonfarm payrolls report showed a rebound in job growth to 223,000, but slower wage growth at just a tenth of a percent. The improvement from March's 85,000 jobs calmed some nerves over the state of the U.S. economy, but wage growth was not enough, in the eyes of most traders, to warrant central bank tightening immediately.