S&P/ASX 200 Index (ASX: XJO) shares are staging a welcome rebound today.
After falling 1.5% yesterday, the benchmark index is up 1.1% in afternoon trading.
This comes despite further, more modest falls in US markets yesterday (overnight Aussie time), which saw the S&P 500 slip another 0.6%. US markets have come under renewed pressure amid fears of rising interest rates and a potential recession in the world’s top economy.
So, why are ASX 200 shares shaking off the malaise to put in such a strong day?
ASX 200 shares welcome COVID restriction news out of China
Part of the answer looks to lie with the world’s number two economy and Australia’s top trading partner, China.
The Middle Kingdom may be offering tailwinds to ASX 200 shares on two separate fronts.
First, China announced that it will scale back some of its economy crippling COVID-19 restrictions. While China appears intent on pursuing its zero-virus policies, the nation is scaling back testing requirements for people flying in from the US and other select nations.
This may be the first move towards reopening the country and could see an uptick in China’s economic growth.
What else did China report?
Other news out of China that could be helping push ASX 200 shares higher today is a larger than expected 0.15% reduction in its benchmark reference rate for mortgages.
That’s the second cut this year, taking the reference rate down to 4.45%.
Chinese officials said they’re ready to take additional steps to help spur economic growth.
Commenting on the move, Capital Economics’ Julian Evans-Pritchard said (quoted by Reuters), “Today’s reduction to the five-year Loan Prime Rate should help drive a revival in housing sales, which have gone from bad to worse recently.”
Evans-Pritchard cautioned that “the lack of any reduction to the one-year LPR suggests that the PBOC [People’s Bank of China] is trying to keep easing targeted and that we shouldn’t expect large-scale stimulus of the kind that we saw in 2020.”
With many ASX 200 shares doing business with China, any revival in the nation’s massive housing sector will be welcomed.
The post Why are ASX 200 shares rebounding on Friday? appeared first on The Motley Fool Australia.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of January 12th 2022
More reading
- Here are the 3 most traded ASX 200 shares on Friday
- Why Australian Vanadium, John Lyng, Nufarm, and Unibail-Rodamco-Westfield are dropping
- Why are ASX coal shares charging higher again today?
- The Amcor share price has racked up 7 all-time highs in the past month. What’s going on?
- Novonix up 15% on Friday as the market recovers
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/mup6Nri
Leave a Reply