Chinese banks’ funding constraints are set to ease after policy makers authorized the sale of certificate of deposits in a move toward loosening control over interest rates in the world’s second-largest economy.
The cost of locking in China’s interest rates slid for a fourth day, the longest run of declines since February, and money-market rates fell after the central bank pledged to ease the worst cash crunch in a decade.
Asian stocks fell, dragging down the MSCI Asia Pacific Index by the most in almost two weeks on speculation a possible Federal Reserve asset-purchase program that may be announced next week will disappoint investors.
Asian stocks rose, taking the MSCI Asia Pacific excluding Japan Index to its longest winning streak since July, ahead of a report this week that may show the labor market improving in the world’s biggest economy.
China’s benchmark money-market rate was poised for the biggest weekly gain since October 2007 before an increase to banks’ reserve requirements takes effect and on speculation policy makers will raise interest rates.
Asian shares slumped the most in almost two weeks and U.S. stock index futures fell as commodity prices dropped and the dollar strengthened. Australia’s currency weakened after the nation’s inflation rate rose less than economists estimated.
Asian stocks fell for a second week, paring the benchmark index’s second consecutive monthly gain, on concern earnings growth will slow and possible asset purchases by the Federal Reserve may disappoint investors.