Global stock markets are expected to continue their upward momentum, boosted by China’s recent fiscal stimulus measures and strong US economic indicators, Bloomberg reports.
Asian markets, including Hong Kong, Japan, and Australia, are poised for further gains as investors grow more optimistic about global economic recovery. This follows a week where US indexes hit fresh records and Chinese stocks listed in the US saw their biggest surge in over a year.
On Thursday, the S&P 500 reached its 42nd closing high for the year, while the Nasdaq Golden Dragon Index, which tracks Chinese shares listed in the US, jumped 11%, marking its strongest performance since early 2022. Futures for US stock indexes also rose early Friday, indicating continued market optimism.
The market rally was largely driven by a pledge from China’s top leadership for additional fiscal spending, measures to stabilize the property sector, and “forceful” interest rate cuts. These announcements signal Beijing’s determination to address its slowing economic growth, which has weighed on global markets in recent months. Investors are now looking forward to more details on the stimulus plan, particularly ahead of China’s weeklong national holiday.
The positive sentiment was bolstered by strong economic data from the US, where revised figures showed that the economy rebounded from the pandemic more robustly than previously thought. The US labor market remained resilient, with a decline in jobless claims and steady growth driven by consumer spending.
Emerging-market stocks had their best day in nearly a year, lifted by China’s stimulus efforts and robust US economic data. The Bloomberg Dollar Spot Index dipped, while US Treasury yields rose. Commodities saw mixed movement, with copper and iron ore climbing, while oil prices slipped. Metals surged, with copper rising above $10,000 per ton, and gold hitting a record high.
“Greater stimulus measures out of China and the market pricing in an aggressive Federal Reserve easing cycle, while the US economy remains strong, bode well for risk assets,” said Elias Haddad, strategist at Brown Brothers Harriman.
He added that this environment has put downward pressure on the dollar, particularly against growth-sensitive currencies.
US stock markets were further buoyed by strong corporate earnings, particularly from Micron Technology, which benefited from rising demand for AI-related products. However, news that the US Department of Justice was investigating Super Micro Computer Inc. — another AI-related company — dampened enthusiasm, sending its shares lower.
Elsewhere, Costco Wholesale Corp. reported better-than-expected earnings, adding to the positive corporate news that helped lift markets. Investors are now closely watching key economic releases in the US, including the Federal Reserve’s preferred inflation measure and consumer demand data, for further clues about the economic outlook.
In a busy week for global central banks, the Swiss National Bank cut interest rates by a quarter point, marking its third consecutive rate cut. Mexico also reduced its borrowing costs, following similar moves earlier in the week by Hungary and the Czech Republic. These decisions come as central banks in various regions respond to evolving economic conditions.
Oil prices dropped further amid reports that Saudi Arabia plans to increase production in December, while Libya took steps to boost its own crude output. Despite these declines in oil, other commodities like copper and iron ore surged as market sentiment improved.
With global markets rallying on the back of Chinese stimulus measures and strong US economic data, investors are optimistic that risk assets will continue to perform well. However, attention remains focused on upcoming economic data and central bank actions, particularly in the US, where future Federal Reserve policy moves will be closely watched.
