After China’s Stimulus Sugar Rush – Reuters

Market Update: A Global Perspective

Kevin Buckland provides insights into the current state of European and global markets.

China’s recent stimulus measures are still making waves in its domestic markets, yet the broader impact appears to be waning. Mainland blue-chip stocks, following a remarkable 4.3% surge on Tuesday, experienced further gains of up to 3.4%. Similarly, Hong Kong markets climbed as much as 3.1%, building on a 4.1% increase from the previous day.

The initial boost from China’s strong performance on Wednesday provided some support to stock benchmarks in Australia and South Korea, which are both closely connected to China’s economic health. However, these gains did not sustain, fading quickly throughout the session.

Analysts have expressed skepticism about whether the recently announced extensive stimulus measures would effectively solve underlying structural issues, even amid the initial euphoria.

In the United States, market reactions were restrained, with increases ranging from 0.2% to 0.5%. At the time of writing, U.S. futures indicated a similar decline. Concerns surrounding a potential economic slowdown in the U.S., highlighted by a surprising drop in consumer confidence reported on Tuesday, contributed to a more cautious global outlook.

European markets are also facing their share of economic challenges, with futures suggesting a lower opening for regional stocks.

Overall, the prevailing narrative emphasizes a global easing cycle, notwithstanding Japan’s unique position. The People’s Bank of China continued its series of rate cuts with another reduction on Wednesday, while traders are increasingly anticipating a significant cut from the Federal Reserve during its November meeting.

Fed Governor Adriana Kugler is scheduled to discuss the economic outlook later today, contributing to a week filled with commentary from Federal Reserve officials, culminating with Chair Jay Powell’s remarks on Thursday.

In Europe, noteworthy events today include a roundtable discussion featuring the ECB’s Elizabeth McCaul and insights from the Bank of England’s Megan Greene regarding consumer spending. Additionally, Sweden’s Riksbank is expected to announce a 25 basis point rate cut, with forecasts suggesting two more cuts could follow in the final meetings of 2024. Riksbank Governor Erik Thedeen has not ruled out the possibility of a larger half-point cut.

Key developments to watch for Wednesday include:

• Riksbank policy decision
• Discussions by ECB’s McCaul and BoE’s Greene
• Updates on France’s consumer confidence and unemployment for September

(Adapted from the original by Kevin Buckland; Edited for clarity.)