Asian Markets Rally as China Pledges Rate Cuts; Trade War Concerns Limit Gains

Asian stock markets advanced on Friday, with Chinese equities leading the charge after the People’s Bank of China (PBoC) pledged additional monetary easing. However, gains across the region remained restrained due to escalating trade tensions, particularly following U.S. President Donald Trump’s latest tariff threats.

Chinese Stocks Surge on PBoC Stimulus Measures

China’s Shanghai Composite Index jumped 1.5%, reaching its highest level since December 31, 2024, while the Shanghai Shenzhen CSI 300 Index surged 2.2%. Hong Kong’s Hang Seng Index also climbed 1.9% as of 03:08 GMT.

The rally came after the PBoC announced plans to cut interest rates and introduce liquidity-boosting measures to counteract slowing economic growth. The central bank confirmed that the seven-day reverse repo rate will serve as its main monetary policy tool, reflecting a move towards a more market-driven approach.

China’s annual parliamentary meeting, known as the Two Sessions, wrapped up on March 11, setting a 5% GDP growth target for 2024 and outlining pro-business reforms, fiscal stimulus, and property sector support.

The optimism surrounding China’s stimulus measures spilled over into broader regional markets:

• Australia’s S&P/ASX 200 gained 0.4%.
• The Philippines’ PSEi Composite Index edged up 0.5%.
• Japan’s Nikkei 225 advanced 0.4%, supported by a weaker yen.
• TOPIX rose 0.5%.
• Markets in India were closed for a public holiday.

Trade War Fears Weigh on Investor Sentiment

Despite the regional uptrend, trade war concerns continued to loom large. President Donald Trump intensified tensions by threatening a 200% tariff on European alcoholic beverages, including wines and champagnes, if the EU implements its planned 50% tariff on American whiskey.

The EU’s counter-tariff, set to take effect on April 1, is a direct response to the U.S.’s recent 25% tariffs on imported steel and aluminum, which were enforced this week.

As a result, some Asian markets faced selling pressure:

• South Korea’s KOSPI remained largely unchanged.
• Indonesia’s Jakarta Stock Exchange Composite Index slipped 1%.

Outlook: Rate Cuts vs. Trade Tensions

The latest developments highlight a tug-of-war between monetary stimulus and geopolitical risks. While China’s policy support fuels optimism, uncertainty over U.S.-EU trade relations and its impact on global supply chains could keep markets volatile in the near term.

Investors will closely watch U.S. trade policies, further PBoC actions, and global inflation trends for further market direction.

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