Equities on Friday rose in Asian trade after the European Central Bank (ECB) unveiled a fresh round of economic stimulus and another interest rate cut, while a report said that the US was considering a short-term trade agreement with China.
Global markets have been buoyed this week by a growing sense that central banks are on the brink of easing monetary policy to support growth, and on Thursday the ECB did not disappoint.
It said that it would restart its bond-buying quantitative easing program to boost liquidity, provide support for struggling banks and reduce borrowing costs deeper into negative territory in a bid to kick-start lending.
The central bank said that it would not lift rates until inflation moved toward its goal of just less than 2 percent over the medium term.
The announcement, while slightly short of expectations, was broadly cheered by markets, sending equities in Europe and New York higher.
“In the end, it wasn’t a big bazooka, but ECB President Mario Draghi did his level best trying to convince investors that monetary policy will remain extremely accommodative for some considerable time to come,” National Australia Bank Ltd senior market strategist Gavin Friend said.
The news also provided further hope that the US Federal Reserve would cut rates at its meeting next week, even though data showed a jump in US inflation last month.
Investors were given an extra fillip by a Bloomberg News report that US officials were considering an interim trade deal with China that could freeze or cancel some tariffs if Beijing agrees to commitments on intellectual property and agricultural purchases.
The report, citing five unnamed sources, came as tensions between the two sides show signs of easing ahead of high-level talks in Washington next month.
China has said that it would remove some US goods from its tariffs list — with big-ticket items including pork and soybeans now also being considered — while US President Donald Trump announced a delay to some levies on Chinese imports.
“A lot of people are talking about, and I see a lot of analysts are saying: an interim deal, meaning we’ll do pieces of it, the easy ones first,” Bloomberg quoted Trump as saying on Thursday. “But there’s no easy or hard. There’s a deal or there’s not a deal, but it’s something we would consider.”
Also, US Secretary of the Treasury Steven Mnuchin said that he was “cautiously optimistic” about an agreement being reached, telling CNBC: “We want to make meaningful progress.”
Tokyo’s Nikkei 225 on Friday rose 228.68 points, or 1.1 percent, to 21,988.29, surging 3.7 percent from a close of 21,199.57 on Sept. 6.
Hong Kong Hang Seng on Friday climbed 265.06 points, or 1 percent, to 27,352.69, a jump of 2.5 percent from 26,690.76 a week earlier.
Sydney rose 0.2 percent and Singapore ended 0.5 percent higher. Manila, Bangkok and Jakarta also rose, but Wellington struggled.
Taipei, Shanghai and Seoul were closed for the Mid-Autumn Festival holiday.
On Thursday, the TAIEX edged up 37.20 points, or 0.3 percent, to 10,827.55, gaining 0.4 percent from a close of 10,780.64 on Sept. 6.
Turnover totaled NT$116.48 billion (US$3.75 billion)
Additional reporting by staff writer