Chinese stocks on Monday rebounded after China’s central bank took a series of steps to boost the country’s economy, helping them erase February’s record coronavirus-related sell-off.
The People’s Bank of China cut one of its key interest rates, injected 200bn yuan (£22bn, $28.6bn) into the economy, and made 100bn (£10.9bn) yuan worth of short-term securities purchases.
The gains mean that Chinese stocks have now recovered from their record 3 February losses, when the country’s markets reopened after the Lunar New Year to coronavirus panic.
Stocks in Japan fell, meanwhile, after official data showed that the country’s economy shrunk by 1.6% in the final quarter of 2019, the sharpest contraction since 2014.
Experts warned that the country could fall into recession, while Bank of Japan governor Haruhiko Kuroda hinted that his bank could take stimulus measures if coronavirus dented the Japanese economy further.
Analysts pointed to the impact of trade tensions, a sales tax-related slowdown in consumer spending, and recent typhoons in Japan.
Stocks in Europe were more muted, but made small gains. The FTSE 100 (^FTSE) was up by more than 0.2% in London. Germany’s DAX (^GDAXI) was up similarly, while France’s CAC 40 (^FCHI) was up by less than 0.1%.
“European shares were a little indecisive at the start of play following a mixed bag overnight in Asia, but are leaning higher with stimulus from China helping to lift the mood,” said Neil Wilson, the chief markets analyst at Markets.com.
The People's Bank of China trimmed its one-year medium-term lending rate to 3.15% from 3.25%, and analysts expect the bank to take further measures to boost the country’s economy.
“Shares in Hong Kong and Shanghai advanced as China cut a key medium-term interest rate, while Tokyo shares slipped on growth concerns,” Wilson said.
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“Markets are betting this will be only a part of a wider stimulus programme to offset the economic damage wrought by the Covid-19 coronavirus — the [People’s Bank of China] has already been injecting liquidity and there will no doubt be more to come.”
Chinese authorities reported another 2,000 cases of coronavirus over the past 24 hours, pushing the total to more than 70,000.
The virus has disrupted the Chinese economy by forcing the closure of factories and hampering global supply chains.