The Hang Seng index rallies going into the close as China announces RRR cut

<p>Hong Kong's main stock index is now up over 3% on the day and rallying into the closing stages, after the Chinese central bank announced the first RRR cut of the year <a href="https://www.forexlive.com/centralbank/pboc-to-cut-reserve-requirement-ratio-from-5-february-20240124/" target="_blank" rel="follow">here</a>. It is a bigger one this time around as well as the reduction is 50 bps, as opposed to the two 25 bps cuts performed in March and September last year.</p><p>Risk assets in general are feeling more buoyant now as we look towards European trading, with S&amp;P 500 futures also rising by 0.4% on the day. In turn, the dollar is losing some ground with USD/JPY now down 0.4% to 147.70 and EUR/USD up 0.2% to 1.0875 currently.</p><p>Going back to Chinese equities, is this the start of a major turnaround? Or is it merely a dead cat bounce? That's a really tough question for investors to make sense of at the moment. I mean, this 50 bps RRR cut isn't quite the supposed $278 billion rescue package touted <a href="https://www.forexlive.com/news/bloomberg-headline-china-mulls-stock-market-rescue-package-backed-by-278-bn-20240123/" target="_blank" rel="follow">here</a> yesterday.</p>

This article was written by Justin Low at www.forexlive.com.