Markets rally on Powell comments, China boosted by duty cut

Asian and European stock markets advanced Monday as investors welcomed the latest signals from central bankers regarding monetary policy and Chinese stimulus measures.

In a much-anticipated speech Friday, U.S. Federal Reserve chief Jerome Powell left the door open to further interest rate hikes but repeated his pledge that decisions would be dependent upon progress in bringing inflation to heel.

Powell's comments suggested borrowing costs would be held at a 22-year high of 5.25-5.5 percent next month, though investors remain concerned more could come before year's end.

While inflation is coming down, a strong run of economic data -- particularly on jobs -- has been seen by markets as putting pressure on the Fed to keep hiking interest rates.

"If the data continues to show an ease in labor market tightness and price pressures, then the Fed is likely done with its tightening cycle," said National Australia Bank's Rodrigo Catril.

"If the data doesn't play ball, then further tightening should be expected. Thus, upcoming key market data releases (inflation and labor market) are likely to set the tone for markets over coming months."

Analysts said the focus on data meant this week's inflation and jobs figures take on even more significance.

Powell's remarks sent US stocks lower initially before they bounced back to end Friday on a positive note.

And Asia followed suit Monday, with Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, Taipei, Mumbai, Bangkok, Jakarta and Wellington all enjoying a strong start to the week.

Paris and Frankfurt both rose in midday trading. London was closed for a holiday.

- 'Positive signal' -

Shanghai was boosted by China's decision to slash the tax paid on stock trades for the first time since 2008 as authorities battle to support the world's second-largest economy.

Officials also said they would slow the pace of new listings, which usually suck up market liquidity, and followed a series of pledges from the authorities that have failed to lift optimism.

Analysts at China International Capital Corp said the latest measures beat expectations.

"The increasing force of the policy tools will lift market confidence, amplifying the positive signal for the market," they said.

But Stephen Innes at SPI Asset Management was more skeptical about their potential impact.

"While the emergence of more accommodative measures is encouraging, the reality remains that these interventions seem somewhat fragmented, particularly within the broader context of the substantial property market downturn," he said.

The moves came as shares in troubled Chinese property giant Evergrande resumed trading in Hong Kong after a 17-month suspension for not publishing its financial results.

They plunged more than 80 percent after it released its earnings Sunday that showed losses of $4.53 billion in the first half of the year and just $556 million in cash assets.

Once China's largest real estate firm, Evergrande defaulted in 2021 and is saddled with more than $300 billion in liabilities, becoming a symbol of a nationwide property crisis that many fear could spill over globally.

Investors were also keeping tabs on US Commerce Secretary Gina Raimondo's talks with Chinese counterparts in the latest bid to ease trade tensions between the world's two largest economies.

Raimondo's visit -- which lasts until Wednesday -- is the latest in a series of high-level trips to China by US officials in recent months and could culminate in a meeting between presidents Joe Biden and Xi Jinping.

- Key figures around 1015 GMT -

Frankfurt - DAX: UP 0.3 percent at 15,679.68

Paris - CAC 40: UP 0.5 percent at 7,264.60

EURO STOXX 50: UP 0.5 percent at 4,258.19

London - FTSE 100: Closed for public holiday

Tokyo - Nikkei 225: UP 1.7 percent at 32,169.99 (close)

Hong Kong - Hang Seng Index: UP 1.0 percent at 18,130.74 (close)

Shanghai - Composite: UP 1.1 percent at 3,098.64 (close)

New York - Dow: UP 0.7 percent at 34,346.90 (close)

Euro/dollar: UP at $1.0811 from $1.0797 on Friday

Pound/dollar: DOWN at $1.2577 from $1.2578

Euro/pound: UP at 85.96 pence from 85.82 pence

Dollar/yen: UP at 146.54 yen from 146.44 yen

West Texas Intermediate: UP 0.5 percent at $80.20 per barrel

Brent North Sea crude: UP 0.3 percent at $84.69 per barrel