Asian Stocks Fall Amid Trade Concerns; China Cuts RRR

Asian equities were mostly lower in morning trade

Investing.com – Asian equities were mostly lower in morning trade on Monday amid lingering trade concerns. The People’s Bank of China’s (PBoC) announcement that it would cut the required reserved ratio (RRR) by 0.5% caught some attention.

The PBoC could unlock about 700 billion yuan (US$108 billion) of liquidity by cutting the RRR, which would become effective on July 5, according to the central banks’ website.

The move was widely anticipated as China said last week that it would use monetary policy tools, including cutting reserve ratios for some banks, to boost credit supply to smaller companies.

Analysts expect the bank to further ease policy to help cope with a slowing economy, reports on Monday suggested.

"While the PBOC reiterated its neutral stance, we think that the move is one step further toward more accommodative monetary policy, which is only fitting given softening growth and mounting trade tensions," Wei Yao, China economist at Societe Generale (PA:SOGN) SA, wrote in a note.

The Shanghai Composite and the Shenzhen Componentt were both up 0.1% following the news. Hong Kong’s Hang Seng Index slipped 0.3%.

Meanwhile, the U.S. is considering to declare China’s investment in U.S. technologies companies a threat to economic and national security, according to reports on Monday that cited eight people familiar with the plans.

The reports further noted U.S. Treasury Secretary Steven Mnuchin would suggest administering the law in a report scheduled to be released on June 29.

Japan’s Nikkei 225 traded 0.3% lower in morning trade as the yen advanced, while South Korea’s KOSPI also fell 0.3%.

A senior U.S. defence official, who spoke on condition of anonymity, said on Monday that the U.S. would soon request North Korea a timeline with “specific asks” to follow up North Korean leader Kim Jong-un’s promise to work toward complete denuclearization of the Korean Peninsula.

"We'll know pretty soon if they're going to operate in good faith or not," the official said.

"There will be specific asks and there will be a specific timeline when we present the North Koreans with our concept of what implementation of the summit agreement looks like."

Down under, Australia’s S&P/ASX 200 was down 0.2%.

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