Markets in Asia began the week cautiously on Monday following last week’s high, as most of Asian stocks plunged with market players getting some profits while oil edged down for a second session after hitting above $40 per barrel.
After the market turmoil that glided across the global trading floors in the first two months of the year, some grounds have been regained and March witnessed a broad surge, with Federal Reserve’s remarks last week on cutting interest rate hike probability.
On the other hand, analysts stated that global markets are struggling to keep their gains while market players keep a close eye on the long Easter break starting on Friday.
According to a chief market strategist, “Were not seeing a lot of enthusiasm in markets given the holiday-shortened week and the strong rally that weve had recently. We need to see more catalysts for this rally to continue. We need to see some signs growth is stable.”
During early trading session, the Shanghai Composite Index jumped 1.6 percent after Chinese authorities eased rules on margin trading, effectively borrowing money to invest, for the first time since last summer’s collapse in mainland markets.
As stated by a market analyst, “The loosening could reignite interest in the equity market, particularly as the regulators actions last year – to rein back private sector broker leverage –helped trigger the correction in equity prices.”
Another analyst added, “The state doesn’t want the market to decline and they want to see buying from investors so we’ve seen them loosen their grip on margin lending.”
Meanwhile, losses were tempered by expectations that China may soon slash interest rates again as pressure on the Yuan reduces.
The swings in the energy market which is a general decline in commodities and recovering growth in China have feared financial markets in recent months.
Concerns over the outlook for global growth were also instrumental in the United States Federal Reserve’s strategy last week showing a sluggish path for future rate hikes.
Morgan Stanley Capital International’s widest index of Asia Pacific stocks outside Japan tumbled 0.2 percent after joining positive territory for the first time this year on Friday. It soared 16 percent from January’s lows, as Japanese markets were did not open because of a national holiday.
As noted by an economist, “Despite the current rally in risk, we are more inclined to be broadly bearish on emerging markets given the underlying weakening trend.”
The People’s Bank of China encouraged financial companies on Monday to develop financial products for the elderly with long term and stable yields to meet their pension needs.
China’s central bank jointly issued guidance with other top ministers and regulators on financial support for developing the pension’s services sector on Monday. The guidance was published on the central bank website, as the bank also cheered pension services companies to list shares and issue bonds.
“Chinas economic growth will continue to develop in a stable and healthy manner. Over the next five years, our economic growth will keep above 6.5% each year. We will strengthen coordination at the forefront of fiscal policy, monetary policy, industrial policy, investment policy and prices policy,” an analyst noted.
Read updated and broad coverage of the latest news on forex, commodities, individual stocks, stock indices, as well as the world economy. Subscribe to our FSM News daily newsletter to receive reliable updates every day.