Asian equities are higher when India reduces taxes and China reduces interest rates: The Asian market is the latest
India's benchmark index The Sensex index rose 5.3%, after cuts in the country's corporate tax rates sent markets jumping. Indian companies will be taxed at a rate of 22% instead of 30%, the government announced on Friday. The Indian rupee also strengthened after the news, jumping 0.5% to trade at $ 70.95 per US dollar.
The Chinese central bank renewed LPR last month in a long-awaited reform of the way it manages money to support growth. The goal is to make it cheaper and easier for companies to borrow. LPR, which will be the new benchmark for banks to price loans, is supposed to reflect changes in market rates.
Friday's cut in LPR is "a baby step," as the central bank is wary of the new interest rate, said Ken Cheung, head of Asian currency strategist for Mizuho Bank in Hong Kong.
"Since the new LPR is relatively untested, the PBOC appears to be a measured approach to begin with," Julian Evans-Pritchard, senior China economist for Capital Economics, said in a report Friday.
Evans-Pritchard still expects the central bank to make more aggressive interest rate cuts going forward.
"With economic activity likely to come under further pressure in the coming quarters and monetary easing so far unable to generate much of the upside in credit growth, we believe the PBOC will need to start projecting major declines in LPR before long , "he said.
"Global relief bias is still prevalent, but the scale of relief measures can be somewhat disappointing," said Cheung of Mizuho Bank.
"The dramatic escalation of China-US trade talks should, in fact, justify a more conservative monetary easing," he said, adding that market attention is likely to shift to the outcome of the trade negotiations.
The two countries said earlier this month that they have agreed to return to the negotiating table in Washington after months of trade tensions.
Meanwhile, countries have taken steps to decelerate the gap. China said last Friday that it would exempt US soybeans and pork from the latest customs round, and on Monday, the US Department of Agriculture said that US companies have started exporting soybeans to China.
Earlier this month, China said it would waive other tariffs on US goods, and President Donald Trump came up with his own plans to push back new tariffs on Chinese goods within two weeks.
CNN Business & # 39; Anneken Tappe and Rishi Iyengar contributed to the report.
