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James Hyerczyk

After an uneventful weekend, the major Asian Pacific stock markets closed mostly higher on Monday. There were no major news events, but traders did say some of the action was influenced by the People’s Bank of China’s (PBoC) decision to keep the loan prime rate (LPR) unchanged. Trading may have been limited by a U.S. bank holiday on Monday.

On Monday, Japan’s Nikkei 225 Index settled at 24083.51, up 42.25 or +0.18%. Hong Kong’s Hang Seng Index finished at 28849.84, down 206.58 or -0.71% and South Korea’s KOSPI Index closed at 2262.64, up 12.07 or +0.54%.

China’s Shanghai Index settled at 3095.79, up 20.29 or +0.66% and Australia’s S&P/ASX 200, finished at 7079.50, up 15.40 or +0.22%.

Trade Deal Impact Will Determine Next Move by PBoC

The People’s Bank of China kept the one year and five year loan prime rates unchanged for January.

“We still expect some changes to the LPR at some point this year, even though we’re not seeing that as early as like the first month of the year right now,” Kevin Leung, executive director of investment strategy at Haitong International Securities, told CNBC’s “Street Signs” on Monday.

“The phase one of the trade deal has been…signed right now, so I think (the Chinese authorities) would take a few months to see if anything is going on or if there’s any further improvements made or if there’s any deterioration in…the second phase when that happens,” Leung said. “If there’s any more stimulus policies coming in, I think it will be coming in the second quarter of the year.”

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Chinese Shares Supported by Signs of Stabilizing Economy, Rising Government Stimulus Expectations

China is confident of maintaining steady industrial growth this year despite big pressures facing the sector, Minister of Industry and Information Technology Miao Wei said on Monday, Reuters reported.

His remarks came after China’s industrial output topped expectations in December by growing 6.9% from a year earlier, the strongest pace in nine months.

Investors also expect more government stimulus ahead after China’s economic growth cooled to a near 30-year low of 6.1% in 2019 amid a bruising trade war with the United States.

Pharmaceutical Stocks Spike after China Reports New Coronavirus Cases

Chinese pharmaceutical stocks skyrocketed Monday as China reported more than 100 new cases of pneumonia caused by a new strain of coronavirus.

Jiangsu Bioperfectus Technologies, a company that recently said it has created a drug testing kit that could allow hospitals to better detect the virus, jumped by 20% on the Star Market. That’s the maximum allowed on that board, which was launched in Shanghai last year.

Aussie Shares Extend Gains for 5th Straight Session

The Australian stock market extended its winning streak to a fifth straight session on Monday, following the record highs on Wall Street Friday amid continuing optimism following the signing of the U.S-China trade deal. Upbeat economic data from China and the U.S. last week also boosted sentiment.

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