Market Analysis

Image Credit: Reuters

China’s stock market surged, and commodities along with the Australian dollar gained support on Tuesday after Beijing announced new measures, including rate cuts and initiatives to boost consumption. However, global stocks were mixed ahead of the crucial U.S. inflation report. 

The Reserve Bank of Australia (RBA) is expected to keep its cash rate unchanged at 4.35% later today. In contrast, the S&P 500 fell by 0.6% overnight, and futures dipped by 0.1% in Asia. Nvidia’s 2.5% drop, exacerbated by China’s antitrust investigation, dampened market sentiment.

MSCI’s Asia-Pacific index outside Japan rose 0.3%, led by the Hang Seng’s 1% gain and a 2% rise in China’s CSI300 index. Japan’s Nikkei gained 0.4%.

Beijing’s Politburo meeting spurred a rally in Hong Kong stocks and drove Chinese government bond yields to record lows, as investors anticipated measures to support economic growth and consumer spending. The Politburo’s shift in monetary policy from "prudent" to "moderately loose" indicates potential rate cuts, fiscal expansion, and asset purchases, although analysts caution that further details may come later in the week from China’s Central Economic Work Conference. Despite the rally, concerns linger that the measures won’t drive long-term growth, as credit demand has softened, and the burden may fall more on fiscal policy.

The Australian dollar gained, benefiting from China’s policy shift, as did Australian mining stocks like Fortescue and Rio Tinto. The Aussie remained steady at $0.6428 ahead of the RBA's policy decision, with traders focusing on any potential guidance for future policy changes.

The U.S. consumer price report is expected on Wednesday, with core inflation projected to remain at 3.3% for November, likely not impacting the expected rate cut next week. Traders are also anticipating rate cuts from the European Central Bank, the Bank of Canada, and potentially the Swiss National Bank, which may seek to address the Swiss franc's rise against the euro.

The euro traded at $1.0548, while the Japanese yen was slightly weaker at 151.45 per dollar. Speculators have recently shifted to a long position on the yen after expectations of a potential rate hike in Japan. 

Oil prices rose following news of China’s policy changes and heightened geopolitical risks, with Brent crude steady at $72.15 per barrel. Gold was stable at $2,664 an ounce, while bitcoin reached $98,040.

Paraphrasing text from "Reuters" all rights reserved by the original author.