China holds key lending rates steady, Japan stocks surge to 34-year high

China holds key lending rates steady, Japan stocks surge to 34-year high

China’s central bank kept its benchmark lending rates unchanged on Monday, as expected by analysts, amid signs of a gradual recovery in the world’s second-largest economy.

Aerial view of vehicles being driven on the road through the central business district on October 5, 2020 in Beijing, China.

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The one-year loan prime rate (LPR) remained at 3.45%, while the five-year LPR, which influences mortgage rates, stayed at 4.2%. The rates have been unchanged since June last year, when the central bank cut them by 20 basis points to support the economy hit by the coronavirus pandemic.

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The decision came after China reported better-than-expected GDP growth of 6.5% in the fourth quarter of 2023, making it the only major economy to expand last year. However, some recent indicators, such as retail sales, industrial output and fixed asset investment, have shown a slowdown in momentum.

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The central bank has adopted a cautious stance on monetary policy, avoiding large-scale stimulus measures and focusing on targeted support for small businesses and vulnerable sectors. It has also warned of financial risks and asset bubbles, especially in the property market, which has seen a surge in prices and sales.

Meanwhile, Japan’s stock market rallied to a near 34-year high on Monday, boosted by optimism over the global economic recovery and corporate earnings. The Nikkei 225 index jumped 1.62% to close at 36,546.95, the highest level since April 1990. The broader Topix index gained 1.39% to end at 2,544.92.

The Japanese market was also supported by a weaker yen, which benefits the country’s exporters, and hopes for more fiscal stimulus from the new Prime Minister Fumio Kishida. The Bank of Japan started its two-day policy meeting on Monday, and is expected to keep its ultra-loose monetary policy unchanged.

Other Asian markets were mixed on Monday, with Hong Kong’s Hang Seng index dropping 2.52% and China’s CSI 300 index falling 1.56%, while Australia’s S&P/ASX 200 rose 0.75% and South Korea’s Kospi edged down 0.34%.

On Friday, Wall Street closed at record highs, as the S&P 500 index climbed 1.23% to 4,839.81, the Dow Jones Industrial Average added 1.05% to 38,627.99 and the Nasdaq Composite advanced 1.70% to 15,775.65. Investors shrugged off a hotter-than-expected inflation report and focused on strong corporate earnings and the prospects of more fiscal stimulus from the Biden administration.
Source : CNBC

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