TOKYO: Chinese bourses led Asian markets higher on Tuesday, shrugging off weak manufacturing data as oil prices rose after sentiment got a boost from stimulus moves by China’s central bank.
The uptick in most major markets across the region came after China’s central bank cut the proportion of funds that banks must set aside as reserves, in Beijing’s latest attempt to tackle slowing growth in the world’s second largest economy.
Policymakers trimmed the so-called reserve requirement ratio (RRR) for financial institutions by 0.50 percentage points, freeing up more funds for them to lend.
The announcement boosted the mood on trading floors across Asia, with Hong Kong climbing 0.89 percent in late afternoon trade and Shanghai jumping more than 1.5 percent. Sydney finished 0.85 percent higher.
Tokyo’s benchmark Nikkei 225 index had lingered in negative territory for most of the session as traders fretted about slowing global growth.
But after worries about China receded to the background, the Japanese yen—seen as a safe haven in times of turmoil—eased against the dollar, which is a plus for Japanese shares. At the closing bell, Tokyo was up 0.37 percent.
China’s central bank move came after a G20 finance ministers’ weekend meeting in Shanghai, which stressed the use of all available policy tools to boost global growth and settle wild volatility on equity markets.
“The RRR [reserve requirement ratio]announcement offered something for everyone,” Sean Callow, a foreign-exchange strategist in Sydney at Westpac Banking Corp, told Bloomberg News.
“You could welcome the easing as supportive of growth and indicative of less pressure from capital outflows, or you could see it as a reflection of even greater weakness than expected,” Callow added.
However, weak Chinese manufacturing figures on Tuesday offered the latest grim sign of slowing growth in China’s economy—the world’s second-largest and a key driver of global growth.
February manufacturing activity shrank at its fastest rate in four years.
The official Purchasing Managers’ Index (PMI), which tracks activity in factories and workshops, fell to 49.0 last month, figures from the National Bureau of Statistics (NBS) showed.
That marked the seventh consecutive monthly contraction in the official index, which Bloomberg News said was the longest on record.
The focus on China would now shift to the National People’s Congress, the annual meeting of its rubber-stamp parliament, beginning on Saturday, traders said.
Oil prices rose marginally after a rally in US trading stoked by major crude consumer China’s moves to tackle its slowing economy and top producer Saudi Arabia welcoming cooperative action to stabilize the market.
Riyadh suggested openness in reaching a coordinated solution to market volatility, as a global supply glut weighs on prices.
US benchmark crude for April gained eight cents to $33.83 a barrel on Tuesday while Brent was up one cent at $36.58 a barrel.
In currency markets, the dollar rose to 112.86 yen from 112.72 yen in New York late Monday.