On Tuesday, China announced stimulus measures to bolster its economy. Following this announcement, the widely watched global stock index reached a record high, and copper prices hit their highest level in ten weeks.
Mining stocks rose, causing the Dow and S&P 500 to eek out record closing highs. China, the world’s largest crude importer, announced measures that caused oil prices to rise to a three-week high. The Chinese yuan also reached a 16-month high against the US dollar.
Governor Pan Gongsheng of the People’s Bank of China unveiled proposals to reduce borrowing costs and boost economic growth. He aims to lessen the burden of mortgage repayment on consumers. A proposed 50 basis point reduction in banks’ reserve requirement ratios was part of the statement.
Lithium and copper miners surged on Wall Street. Albemarle gained 1.97%, Arcadium Lithium increased 3.2%, Freeport-McMoRan rose 7.9%, and Southern Copper added 7.2%.
Chinese companies with U.S. listings, including Alibaba (up 7.9%), PDD Holdings (up 11.8%), and Li Auto (up 11.4%), saw gains in their shares.
China’s news is “feeding through into parts of the U.S. market, where you see some more China-sensitive, more cyclical industries like metals and mining materials… outperforming,” said to Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
The S&P 500 gained 14.36 points, or 0.25%, reaching 5,732.93. The Nasdaq Composite rose by 100.25 points, or 0.56%, to 18,074.52, while the Dow Jones Industrial Average increased by 83.57 points, or 0.20%, to 42,208.22.
Early trading saw a small decline in the S&P 500. This followed data revealing unexpectedly low U.S. consumer sentiment in September amid growing concerns about the labor market.
The Federal Reserve of the United States started its most recent cycle of quantitative easing last week by reducing interest rates by 50 basis points. Now, investors are searching for signs of the bank’s next step.
The MSCI global stock index increased 4.51 points, or 0.54%, to 844.56, a record high. STOXX 600 index increased by 0.65%.
In the commodities market, U.S. crude finished the day at $71.56 a barrel, up $1.19, while Brent gained $1.27 to close at $75.17 per barrel.
After reaching its peak of $9,825 on July 15, three-month copper on the London Metal Exchange increased 2.7% to $9,802 a metric ton by 1615 GMT. China is a major user of metals.
At $2,658.69 an ounce, spot gold increased by 1.15%.
The Chinese yuan reached 7.017 per dollar during the day, strengthening 0.65% against the US dollar.
The consumer confidence data was followed by more falls in the U.S. dollar index.
The euro increased by 0.59% to $1.1178. Meanwhile, the dollar index, which compares the value of the US dollar to a basket of currencies that includes the yen, dropped by 0.57% to 100.35. The dollar dropped 0.31% to $143.15, against the Japanese yen.
Treasury yields fell in erratic trading. U.S. statistics, particularly the low confidence figures, raised the prospect that the Fed may implement another excessive rate decrease during the policy meeting in November.
According to LSEG statistics, there is a 62% possibility that the rate will be slashed by 50 basis points at the November meeting, up from 54% on Monday, in U.S. rate futures. On Tuesday, the more conventional 25-bp easing showed a 38% probability.
The benchmark 10-year yield touched a three-week high of 3.81% earlier in the afternoon and was now somewhat lower at 3.733%.
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