Asian equity markets got their first opportunity to respond to another heavy dose of monetary easing by the PBoC, and the reaction has been fairly positive though perhaps somewhat more muted than anticipated. Nikkei is leading the rally by over 1% despite the firmer JPY, followed closely by the mainland indices. Dec e-mini futures however are down marginally. On Friday, the PBoC cuts both the 1-year rate and system-wide RRR by 25bps and 50bps, while also deciding to remove the ceiling on bank deposit rates. The decision to cut comes on the eve of China's Communist Plenum where it will formally announce its growth targets going forward. Over the weekend, Chinese leaders worked to manage market expectations of a potential downgrade from the 7% target. Premier Li said 7% is not a hard target that should be "defended to the death", and that 6.9% growth reported in Q3 still represents reasonable range. PBoC Dep Gov Yi Gang then added that China can sustain growth of 6-7% for the next 3-5 years. Later in the day, PBoC research bureau chief Lu Lei also remarked that the GDP of 6.9% reflects China economic fundamentals. Ahead of this week's crucial BOJ meeting that features semiannual review of GDP and CPI objectives, Goldman Sachs forecast that Japan central bank will announce more easing. In Europe, officials with SNB and BOE reacted to the easier tone adopted by the ECB Pres Draghi in the last decision. BOE's Carney said that while UK interest rate hike is a possibility, it is not a certainty. Likewise, SNB VP Zurbruegg said the central bank will monitor and evaluate the impact of any easing measures taken by the ECB the next time when it meets.
Nikkei +0.65% Hang Seng -0.32% Shanghai +0.10%
Eur$ 1.1032 JPY 121.13 CNY 6.35 GBP 1.5326 BRL 3.8763 RUB$ 62.13 WTI $44.68 (+0.18%)
S&P -0.22% EuroStoxx +0.06% Dax +0.11% SMI +0.23%
Macro
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