Stock markets in Asia and Europe were near record highs on Monday after Beijing surprised by cutting a key interest rate for the first time since 2015.
In the latest show of support for its economy, China’s central bank cut rates on seven-day reverse repurchase agreements by five basis points to 2.50%. The news gave a boost to Asia’s main markets. Specifically, the rate cut moved MSCI’s 49-country world share index 0.12% higher to leave it less than 1% off the record high it set back in early 2018.
The pan-European STOXX 600 index extended its six-week winning streak. The index is only eight points short of its own record high of 415.18 points reached in April of this year. Japan’s Nikkei gained 0.5% and was just short of its recent 13-month high.
Beijing’s latest monetary policy move bolstered hopes that it might also be more serious about making progress in trade talks with the United States. On Saturday, Chinese state media said there had been "constructive talks" on trade in a high-level phone call that included Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
