- Asian equities have rebounded firmly amid PBOC’s prudent monetary policy.
- The PBOC has reduced its five-year LPR by 15 bps while the one-year LPR kept unchanged.
- Oil prices are softer on galloping demand worries.
Markets in the Asian domain are advancing sharply higher as the risk-off impulse loses traction and global equities are underpinned by the market participants. The Asian equities have jumped strongly in their early trade after the People’s Bank of China preferred to stick to its prudent monetary policy. The PBOC slashed the five-year Loan Prime Rate (LPR) by 15 basis points (bps). Now, the five-year LPR stands at 4.45% vs. 4.60% recorded last month. While the one-year LPR has kept unchanged at 3.75%.
At the press time, Japan Nikkie225 jumped 1.16%, China A50 surged 1.80%, Hang Seng gained 1.96% while India’s Nifty50 outperformed by adding 2.16%.
The situation of rising inflationary pressures in China was compelling for a conservative monetary policy. Thanks to the advancing oil prices, China’s yearly Consumer Price Index (CPI) in April climbed to 2.1%, firmly higher than the forecast of 1.8% and the prior print of 1.5%. While increasing demand worries amid the resurgence of the Covid-19 were demanding fiscal stimulus. Considering all the catalysts, the PBOC preferred to take the bullet and kept a dovish tone on policy rates.
Meanwhile, the US dollar index (DXY) has failed to sustain above the round-level support of 103.00. In the early trade, the DXY was advancing higher after a super-bearish Thursday. On the oil front, oil prices dropped sharply in early Tokyo amid rising demand concerns due to recession fears in Europe and rising Covid-19 fears in China, and a liquidity squeeze in the US.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.