Asian market stutters as China doles out meagre rate cut

economictimes.indiatimes.com:

Asian markets stumbled on Monday after China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing's run of disappointing stimulus steps. China's central bank trimmed its one-year lending rate by 10 basis points and left its five-year rate unmoved, a surprise to analysts who had expected cuts of 15 basis points to both. Disappointment at the meagre move saw Chinese blue chips ease 0.3%, while the Australian dollar took a dip as a liquid proxy for China risk.

Investors have been hoping for a repeat of the massive fiscal spending that has juiced the economy in the past, but Beijing seems reluctant to add to its borrowing tasks. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3% to a fresh low for the year, adding to a 3.9% dive last week. Japan's Nikkei was still up 0.3%, though that follows a 3.2% drop last week.

EUROSTOXX 50 futures and FTSE futures were near flat. 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. BofA's latest survey of fund managers found sentiment was the least bearish since February 2022, while cash levels were at nearly a two-year low, and 3 out of 4 surveyed expect a soft landing or no landing for the global economy. Analysts at Goldman Sachs, meanwhile, argue there is still scope for investors to add to equity positions.