Asia: Stocks higher following Chinese interest rate cut announcement

Stocks in Asia started the week on the positive side, driven by China’s central bank decision to cut interest rates, showing willingness to boost growth in the world’s second economy.

Shanghai rose 0.78% after the People's Bank of China (PBoC) cut its benchmark interest rate by a quarter point for the second time in three months. The bank cut the interest rate to 5.35%, and lowered its one-year benchmark deposit rate by the same amount to 2.5%. The news also pushed Hong Kong’s Hang Seng up 0.26%.

Analysts at Danske Bank said that although the Chinese leadership probably does not see the need for aggressive easing, the PBoC still has an easing bias “because recent capital outflows and intervention in the FX market have drained some liquidity in the interbank market".

Also on Monday, Chinese manufacturing activity in February expanded by more than previously thought, up at 50.7 from 50.1 and over the 49.7 reading of January, indicating a recovery.

However, official state-sponsored data showed the manufacturing sector shrinking for the second month in a row in February. The official PMI, which focuses more on state-backed companies, was in at 49.9 in February, up slightly from January's 49.8 reading but still below the 50-point level, pointing to a contraction.

In Japan, Nikkei 225 rose 0.15% to a 15-year-high at 18,826.88 helped by a weaker yen. The currency fell to ¥119.8 against the dollar.

Australia’s ASX was also higher 0.51% despite disappointing data. Manufacturing Index came lower in February at 45.4 compared to 49 the month before.

Operating profits declined 0.2% during the last quarter of the year against expectations of 0.5% growth. Inventories also dropped 0.8% from 1.2% in the previous quarter and expectations of 0.1% growth.

In company news, Australian Seven West Media gained 9.12% after its Presto joint venture with Foxtel received approval to launch its TV subscription video on demand service. Mining group Iluka Resources was up 5.34%.

Japanese Nintendo rose 1.53% and Panasonic also rose 1.51% after announcing an increase in its dividend.