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Asian markets rally on China’s policy shifts
Key economic events today include Germany’s CPI data, ECB President Lagarde's speech, and Fed Chair Powell’s comments
China’s new stimulus measures boost investor risk appetite, lifting some risk assets and supporting gold
Antipodean currencies strengthen, while the US dollar weaken
Saudi Arabia may ease production cuts, aiming for an oil price near $100 per barrel
Monday’s market session opens with heightened volatility in the Asian markets as China’s bullish sentiment carries over into the new week. Over the weekend, the People's Bank of China unveiled a series of stimulus measures, including directives for banks to lower mortgage rates on existing home loans, along with property-buying incentives in major cities like Guangzhou, Shanghai, and Shenzhen.
Gold
These moves have bolstered risk appetite among investors, supporting a rally in some riskier assets while also providing underlying strength to gold, which remains near its all-time high.
Despite holding just below last week's peak, gold remains on the defensive heading into the European session, as the broader optimism around China's recovery has tempered safe-haven demand. However, concerns about escalating geopolitical tensions in the Middle East are limiting any significant downside for the precious metal.
Oil
Speculation is growing around Saudi Arabia’s possible gradual withdrawal from its voluntary production cuts, as the country seeks to balance its national budget, which the IMF estimates requires an oil price close to $100 per barrel.
Currencies
On the currency front, Antipodean currencies (AUD, NZD) remain strong in the FX market, while the Swiss franc and the US dollar are experiencing declines. USDJPY continues to slide as mixed macro data emerges from Japan, with August retail sales surpassing expectations at 2.8% y/y but industrial production falling more than expected at -3.3% m/m.
Key economic events today:
- Germany:
- CPI data from individual German states.
- Main CPI reading for September. Forecast: 1.7% y/y (previous: 1.9% y/y).
Eurozone:
ECB President Christine Lagarde's speech.
- United States:
- Speech by Fed's Bowman.
- Chicago PMI for September. Forecast: 46.2 (previous: 46.1).
- Dallas Fed manufacturing data for September. Forecast: -4.5 (previous: -9.7).
- Speech by Fed Chair Jerome Powell.
Markets remain watchful for Fed Chair Powell’s comments, which could shed light on the interest rate trajectory for the remainder of the year, while geopolitical factors and stimulus measures from China continue to drive sentiment across global markets.
