Stocks rose on Monday as Asian markets got their first chance to react to China’s surprise interest rate cut late Friday and thanks to an improvement in business confidence in Germany.
Sentiment was also boosted by Friday’s comments from Mario Draghi, the head of the European Central Bank, BBC reported.
Draghi said the ECB was ready “step up the pressure” and take more measures to try to boost growth in the euro zone.
The Hang Seng index closed up 456.02, nearly 2%, at 23,893.14 points on news of the cut.
On the mainland, the benchmark Shanghai Composite ended 1.85% higher at 2,532.88 points - its highest level since 2011. However, Japanese markets were closed for a public holiday.
In Australia, shares hit a one-month high, thanks to the resources sector which jumped on hopes that the surprise rate cut in China would boost demand for commodities.
The S&P/ASX 200 index closed up 57.50 points, or 1.1%, at 5,361.8 - its biggest percentage gain since 22 October. The rise also broke a five-day losing streak for the index.
Miners were among the biggest risers, with shares of BHP Billiton up 3.8% and Rio Tinto 3.4% higher. South Korean shares climbed to a seven-week high, boosted by China’s rate cut. China is the country’s largest trading partner. The benchmark Kospi closed up 0.7% at 1,978.54.
Growth-sensitive shipbuilders and petrochemical firms outperformed the broader market. Hyundai Heavy Industries shares rose 5.6%, while LG Chem was 6.3% higher.
European stocks extended a two-month high on speculation the European Central Bank will step up stimulus and amid mergers-and-acquisitions activity.
The Stoxx Europe 600 Index added 0.4 percent to 346.6 at 2:15 p.m. in London, with the gauge’s lenders contributing the most to the advance. The benchmark index gained 2.9 percent last week as Mario Draghi said the ECB needs to accelerate inflation and may broaden its asset-purchase program, while China cut key interest rates for the first time since 2012.
“Banks are outperforming on the prospect of economic stimulus measures,” said Guillermo Hernandez Sampere, who helps manage about $161 million (130 million euro) at MPPM EK in Eppstein,Germany. “This is a good sign for their earnings, which suffered in the low interest rate environment.”
Germany’s DAX rose 0.7 percent to 9,804.31 while France’s CAC-40 gained 0.9 percent to 4,385.75. London’s FTSE 100 dipped 0.1 percent to 6,747.57. Wall Street looked set for gains, with futures for both the Dow Jones industrial average and the broader Standard & Poor’s 500 up 0.2 percent in pre-market electronic trading.
