China rises on stimulus hopes, oil climbs
US investors are adopting a cautious approach as they await key economic data
The US dollar softened after hitting a seven-week high
Gold prices are edging toward a support level of $2,630,
WTI crude continues its rally
Investors in the US are adopting a cautious stance early Tuesday, as they await a series of key economic data releases. Focus will be on the NFIB Business Optimism Index for September, alongside the RealClearMarkets/TIPP Economic Optimism Index for October. The Bureau of Economic Analysis will release the Goods Trade Balance figures for August. Additionally, speeches from several Federal Reserve officials are expected to shed light on future monetary policy, with markets closely watching for any signals about potential rate adjustments.
The US dollar softened slightly after reaching a seven-week high, with traders pricing in an 81% probability of a 25-basis point rate cut in November, and a smaller 19% chance of no change.
Asian Markets
Most Asian markets trended lower on Tuesday. However, China's markets defied the regional downtrend, surging on the back of stimulus optimism as trade resumed after the week-long holiday. Investors are increasingly hopeful for additional measures from Chinese officials to support economic recovery.
Japan saw a decline in inflation-adjusted wages, which dropped 0.6% in August, while household spending contracted by 1.9%. Despite this, some analysts maintain that a slow recovery in wages and consumption is still underway.
In Australia, the central bank held rates at a 12-year high, indicating it would wait until inflation moves consistently toward the target before adjusting policy. The Reserve Bank of Australia’s board discussed both tightening and easing measures, acknowledging the prevailing economic uncertainties.
Commodities
- Gold: Gold prices continued their downward trend, edging closer to the $2,630 support level. Investor sentiment remains cautious as smaller bets on a Federal Reserve rate cut weigh on demand. Nonetheless, weakness in the US dollar and geopolitical concerns provide some support for the metal. Traders will be looking to the release of the FOMC minutes and upcoming US inflation data for further direction.
- Oil: West Texas Intermediate (WTI) crude prices extended their rally, trading near $76.85 in early Asian markets. Geopolitical tensions in the Middle East, have been driving oil prices higher. Investors are also anticipating potential stimulus from China, which could further bolster demand for oil as the world's second-largest economy seeks to stabilize its growth.