Australia’s central bank cut interest rates for the first time since 2009 and a Chinese manufacturing index slid, stoking concern that Europe’s debt crisis is weighing on Asia’s export-dependent economies.
The Reserve Bank of Australia today reduced its key lending rate to 4.5 percent from 4.75 percent, saying Europe’s woes are starting to hit Asian trade. In China, a purchasing managers’ index fell to 50.4, the lowest level since February 2009, while South Korea reported the smallest gain in exports in two years.
Asian stocks fell for a second day as slowing growth in the region threatens to limit a global expansion already constrained by elevated unemployment in the U.S. and Europe’s crisis. The Chinese report showed a contraction in export orders, fueling speculation that Premier Wen Jiabao may loosen policies to support the world’s second-biggest economy.
“Similar to 2008, China has a lot of potential for fiscal stimulus and that’s true across the region as well,” said Frederic Neumann, co-head of Asian economics at HSBC in Hong Kong. “The situation in Europe clearly remains challenging.”
The MSCI Asia Pacific Index slipped 2 percent as of 5:10 p.m. in Tokyo.
RBA Governor Glenn Stevens indicated that easing inflation had allowed the nation’s first rate cut since April 2009. The local currency and government bond yields fell