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Asian markets held their breath on Monday as investors waited to see how serious Beijing was about policy easing via widely expected rate cuts, having so far sorely disappointed with its stimulus steps.
China is expected to cut lending benchmarks by between 10 and 15 basis points on Monday, with many analysts predicting a big reduction to the mortgage reference rate to revive credit demand and shore up the ailing property sector.
The central bank on Sunday said Beijing would coordinate financial support to resolve local government debt problems, and there have been reports it was encouraging commercials banks to lend more.
Investors, however, would prefer massive fiscal spending to minor rate cuts and there is little sign of that as yet. The caution kept MSCI’s broadest index of Asia-Pacific shares outside Japan near flat, having slid 3.9% last week to its lowest for the year so far.
Japan’s Nikkei edged up 0.2%, but that follows a 3.2% slide last week.
S&P 500 futures were 0.1% firmer, while Nasdaq futures added 0.2%. Earnings from AI-darling Nvidia on Wednesday will be a major test of valuations.
Analysts are concerned the market has got too long, especially of tech, leaving it vulnerable to a deeper pullback.
