Asian stocks mostly rose on Monday after a rate cut in China fueled risk appetite.
The People's Bank of China (PBOC) lowered its benchmark interest rates by 25 basis points, alongside a half-percentage cut in the reserve requirement ratio (RRR), to jumpstart a slowing economy.
Friday's moves marked the sixth time since November that the PBOC has cut interest rates and the fourth across-the-board reduction of the amount of deposits banks are required to hold in reserve.
"The estimated cash released from these policy changes is 600 to 700 billion yuan in liquidity (about $93.75 to $109.3 billion). Considering the inflation and industrial production [data] over the past quarter, this should be no surprise. In fact, the surprise is that it's taken this long for the PBoC to pull the trigger," IG's market strategist Evan Lucas wrote in a note released early Monday.
"What might be missed by the headline reads is that the PBOC has abolished the deposit rate ceiling – this is a big step forward in liberalizing the interest rate market and shows China is very much committed to its goals of liberating the financial system," he added, referring to the 25-basis-point cut in its one-year benchmark deposit rate.
Following the move, Wall Street finished sharply higher on Friday, with the Nasdaq Composite settling at a two-month high as earnings from companies such as Microsoft beat market expectations. Stocks had already been given a boost by hints of further stimulus from the European Central Bank (ECB) last week.
Meanwhile, Beijing kicks off its fifth plenary session – a key four-day meeting — on Monday, where the nation's economic and social policies for the next five years will be finalized.