China shares gain on weekend central bank rate cut, BoE ahead

Investing.com - Shares in greater China and Asia got a boost on Monday after weekend rate cuts by the People's Bank of China fit in with a general regional trend of easier policy.

The Hang Seng index rose 0.51%, while the Shanghai Composite was up 1.07%. The S&P/ASX 200 gained 0.10%.

The 25 basis point cuts were announced Sunday and bring the one-year lending rate down to 5.1% and the equivalent deposit rate to 2.25%. Economists inside and outside the government believe Chinese interest rates are structurally too high and ill-matched to current economic conditions and should be brought lower.

National Australia Bank's April business conditions index was up 4 for the month, a drop from up 6 in March, while confidence was flat at up 3.

The survey showed a retreat in capex intentions, a fall in employment intentions and capacity utilization the Reserve Bank will watch closely.

NAB chief economist Alan Oster expects the unemployment rate to peak at 6.4% in late 2015. This is an optimistic outlook compared with the RBA's forecast for it to peak at 6.5% in mid-2016. Oster expects the RBA to remain on hold for some time unless unemployment rises more than his forecast.

Last week, U.S. stocks were higher after the close on Friday, as gains in the Healthcare, Oil & Gas and Basic Materials sectors led shares higher.

At the close in New York, the Dow Jones Industrial Average added 1.49% to hit a new 1-month high, while the S&P 500 index added 1.35%, and the NASDAQ Composite index added 1.17%.

Last week, the dollar gained against the euro on Friday after the latest U.S. employment report showed that job creation rebounded in April, but a sharp downward revision to the previous month’s figure checked gains against the other major currencies.

The Labor Department reported that the U.S. economy added 223,000 jobs in April, just shy of economists forecast for 224,000. The unemployment rate ticked down from 5.5% to 5.4%, the lowest since May 2008.

But March’s payrolls report was revised to show that only 85,000 jobs were created, the fewest since June 2012.

The data did little to alter expectations that the Federal Reserve will keep rates on hold at current record lows until later in the year.

In the week ahead investors will be turning their attention to U.S. data on retail sales and consumer sentiment for fresh indications on the strength of the economic recovery.

The euro zone is to release what will be closely watched preliminary estimates on first quarter growth and the latest U.K. jobs report will also be in focus.

On Monday,the Bank of England is to announce its monetary policy decision.