New Zealand’s surprise rate cut shocks Asian markets
On Thursday, most stocks in Asia went up, inspired by profits in energy shares. Japanese Nikkei closed +1.1%, Hang Seng Index boasted +0.7% and Australian S&P/ASX 200 ended up +0.2%.
A sudden rate decrease by New Zealand’s central bank greatly contributed to buying sentiment, with a 0.5% surge in stocks in this country. The Reserve Bank of New Zealand announced that it’s going to have benchmark rates cut by 25 basis points to about 2.25%. Furthermore, more rates cuts are expected in the nearer future. Obviously, that caused an abrupt drop in the value of the local buck during early Asia trade.
Meanwhile, South Korean stocks won weakened right after the BOK decided to keep the country’s benchmark interest rate unchanged. Currently, it’s at 1.5%. however, this decision was completely anticipated by many market participants.
Stocks in Shanghai dropped 0.7%. Traders are still concerned with headlines coming out of the National People’s Congress.
Some financial analysts point out that the Chinese government could be backing up the market by simply purchasing shares this week. However, the benchmark hasn’t surged since the beginning of the week, following a lack of clear indication as for the meaningful stimulus for the national economy.