BEIJING, China – Stocks were largely steady on Monday after gains in Asian trading, as investors hoped major central banks will maintain or expand their monetary stimulus policies.
After China cut interest rates last week, the attention will turn to the Federal Reserve, which is expected to refrain Wednesday from raising interest rates — but signal it will soon be ready to hike. And the Bank of Japan is forecast to add to its stimulus.
KEEPING SCORE: Germany’s DAX gained 0.1 per cent to 10,806.65, faring better than the rest of Europe after a survey showed its business confidence held up in October despite the Volkswagen scandal and a slowdown in China. France’s CAC-40 index was off 0.6 per cent at 4,894.40. Britain’s FTSE 100 shed 0.2 per cent to 6.434.46.
Wall Street was set to dip after a series of gains. Dow futures were down 0.1 per cent and S&P 500 futures dropped 0.2 per cent.
CHINA RATES: Beijing cut interest rates Friday for a sixth time since last November to prop up economic growth, which slowed to a six-year low of 6.9 per cent in the latest quarter. The People’s Bank of China also expanded the pool of money available for lending by reducing the minimum reserves banks must hold. Analysts said the rate cut should help put a floor under sinking growth. But they warned that with Chinese debt levels already relatively high, the impact of more reductions will be limited.
ANALYST’S TAKE: “As underlying growth slows, China’s authorities are likely to respond with additional stimulus,” said Moody’s Investors Service in a report. “We expect the ongoing economic slowdown to continue,” it said. “Additional monetary and fiscal stimulus will keep growth from slowing more rapidly, rather than raising growth to significantly higher levels.”
CENTRAL BANKS: The U.S. Federal Reserve board meets this week but expectations of a rate increase are declining due to weak global growth. Last week, the head of the European Central Bank suggested it might extend its $1.2 trillion bond purchase program or take other measures to stimulate the eurozone’s economy. There are also expectations the Bank of Japan will expand its monetary stimulus. “No one expects the Fed to budge this week and odds of even a December move are now barely one-third, according to the Fed fund futures,” said DBS Group in a report.
ASIA’S DAY: Tokyo’s Nikkei 225 gained 0.7 per cent to 18,947.12 and China’s Shanghai Composite Index advanced 0.5 per cent to 3,429.58. South Korea’s Kospi was up 0.4 per cent at 2,048.08 while Australia’s S&P/ASX 200 declined 0.1 per cent to 5,348.00. Hong Kong’s Hang Seng retreated 0.2 per cent to 23,116.25. Benchmarks in Taiwan and Southeast Asia rose.
CURRENCIES: The dollar declined to 121.00 yen from Friday’s 121.46 yen. The euro edged up to $1.1021 from $1.1018.
ENERGY: Benchmark U.S. crude gained 9 cents to $44.69 per barrel in electronic trading on the New York Mercantile Exchange. The contract soared $1.22 on Friday to close at $44.60.