Hang Seng, Nikkei Gain As China Policy Easing Revives Hopes Of Economic Comeback

Most Asian stocks edged higher on Tuesday as authorities in China rushed in to revive the economy by easing rates, while the US Federal Reserve is poised for more rate cuts.

The Hang Seng was up 1.92% at 18,596, while the Japanese Nikkei was up 1.3% at 38,204 as of 7:42 a.m. Future contracts in Tokyo and Hong Kong benchmarks pointed to a positive closing.

People's Bank of China will slash banks' reserve requirement ratio and outstanding mortgage rates. The panel decided to cut 7-day reverse repo rate to 1.5% from 1.7%.

The PBOC panel said that it might lower RRR again by 0.25-0.5 percentage point, depending on the liquidity condition. "Actions today to have neutral effect on banks' margins."

The central bank on Monday lowered its 14-day reverse repurchase rate to 1.85% from 1.95% to boost the economy.

This comes after the south Asian country's economic concerns deepened, as data showed a decline in government spending and a significant rise in youth unemployment.

Meanwhile, all eyes will be on the US GDP print to ascertain if the Federal Reserve was late in slashing its lending rates. Friday's jobless claims, durable goods, and revised GDP data for US will be the most watched event in the week to know if the Fed was late to react.

While Fed's dot plot showed more rate cuts are coming this year, Fed policymakers officials weighed on the same direction.

Chicago Fed President Austan Goolsbee said with inflation approaching the central bank’s target the focus should turn to the labor market, Bloomberg News reported. He is forecasting “many more” reductions over the next year. Neel Kashkari at the Minneapolis Fed expects two quarter-point rate cuts at the remaining 2024 meetings, the news agency said.

The Reserve Bank of Australia will announce its key policy decisions on Tuesday.

The stocks on Wall Street pared gains from near-record levels to end the session higher. The S&P 500 and Nasdaq Composite advanced 0.28% and 0.14%, respectively. The Dow Jones Industrial Average rose by 0.15%.

Crude oil prices rose after Israel launched airstrikes on Lebanon that killed nearly 500 people. Brent crude was trading 0.34% higher at $74.15 a barrel as of 5:59 a.m. IST. West Texas Intermediate was up 0.38% at $70.64.

• US Dollar Index at 100.91.

• US 10-year bond yield at 3.75%.

• Brent crude up 0.34% at $74.15 per barrel.

• Bitcoin was flat at $63,320.48.

• Gold spot was down 0.13% at $2,625.43.