Asian markets rose on Wednesday morning, building on gains from the previous session. Chinese and Japanese stocks climbed more than 1%.
China’s Shanghai Composite gained 1.6% , while the Shenzhen Component jumped 2.5%.
The People’s Bank of China lowered interest rates on reverse repurchase agreements this week, reducing the 7-day reverse repo rate by 10 basis points from 2.50% to 2.40%, and the 14-day rate from 2.65% to 2.55% as an attempt to support China’s economy.
Steve Cochrane, chief Asia Pacific economist at Moody’s Analytics, said in a note that the virus outbreak could reduce China’s first quarter GDP by 1.2%, and around 0.3% for the entire year.
“Markets have now embarked on a new rebound, spurred by China’s efforts to support its economy alongside an apparent decline in concerns over the Coronavirus impact on the global economy,” Rodrigo Catril, senior foreign-exchange strategist at the National Australia Bank, wrote in a morning note.
“This does not include multiplier effects within other industries, a longer-term loss of confidence, or the longer-term impact on credit availability and credit quality,” he added.
Last week, a Chinese government economist said that the country’s first-quarter economic growth may drop to 5% or even lower due to the virus outbreak, Reuters reported, citing a local magazine.
The National Health Commission said on Wednesday that the death toll on the mainland rose to 490. There were 3,887 new confirmed infections across China, bringing the total accumulated number to 24,324.
On the data front, the Caixin/Markit services purchasing managers’ index slowed to 51.8 last month from 52.5 in December, but was still higher than an 8-month low hit in October.
Hong Kong’s Hang Seng Index traded 1.4% higher.
Japan’s Nikkei 225 advanced 1.7%. The final seasonally adjusted Jibun Bank Japan Services Purchasing Managers’ Index rose to 51.0 in January from a more than three-year low of 49.4 in December, but below a preliminary reading of 52.1.