Global stock markets and commodity prices surged on Tuesday following the announcement of significant stimulus measures by China to support its economy. The People’s Bank of China (PBOC) Governor, Pan Gongsheng, outlined plans to lower borrowing costs, inject liquidity, and ease household mortgage repayments, boosting investor confidence. As a result, the yuan hit a 16-month high against the U.S. dollar, and copper prices reached their strongest level in over 10 weeks.
Pan Gongsheng also revealed that China would introduce structural monetary policy tools aimed at stabilizing capital markets. The news propelled gains in global stock indices, with MSCI’s gauge of global stocks climbing by 0.53%, reaching a record high of 844.47 points. European markets also benefited, as the STOXX 600 rose by 0.65%. Earlier in the day, China’s major indices, including the CSI300 and Shanghai Composite, saw significant gains, while Hong Kong’s Hang Seng Index jumped to a four-month high.
The U.S. stock markets reacted differently. While the S&P 500 fell after data showed a decline in U.S. consumer confidence, the index ultimately rose slightly by 8.29 points. The Dow Jones Industrial Average increased by 0.01%, and the tech-heavy Nasdaq Composite surged by 0.44%. Investors are keeping a close eye on the U.S. Federal Reserve, awaiting more signals on its future rate cuts. The market has priced in a 56.5% chance of another 50 basis point cut in November.
In the commodities market, U.S. crude oil climbed by $1.19, closing at $71.56 per barrel, while Brent crude rose to $75.17 per barrel, up by $1.27. Three-month copper prices surged by 2.7%, reaching $9,825 per metric ton, marking their highest since mid-July. China, the world’s top metals consumer, played a pivotal role in driving these price increases. Gold also saw gains, rising by 1.07% to $2,656.61 an ounce as risk appetite improved on the back of China’s economic boost.
The U.S. 10-year Treasury yields remained relatively steady, with a slight increase of 0.1 basis points. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell by 0.46%, while the euro strengthened to $1.1165. The Japanese yen also saw gains against the dollar, appreciating by 0.13%.
In currency markets, the Australian dollar climbed by 0.67% against the U.S. dollar, following the Reserve Bank of Australia’s decision to hold interest rates steady and maintain a tight policy stance. Meanwhile, Japan’s central bank governor, Kazuo Ueda, stated in Osaka that Japan could afford to take time in reviewing economic developments before making any policy adjustments.
With China taking bold steps to boost its economy and U.S. markets watching the Federal Reserve closely, the global financial landscape is set for further volatility in the coming weeks.
