Re China and China-related stock markets:
As illustrated in the (3-day and one month) Bloomberg charts below for two major markets, volatility remains the central theme as traders and investors seek to converge on a stable consensus regarding the prospects for stimulus measures —… pic.twitter.com/AlKNbwh8N5— Mohamed A. El-Erian (@elerianm) October 9, 2024
The stock market rebounded on Tuesday as investors welcomed a pullback in oil prices and a bounce back in tech stocks. The Nasdaq Composite rose around 1.5%, led by chipmaker Nvidia which gained 4% amid continued bullishness around artificial intelligence. The S&P 500 stepped up about 1%, while the Dow Jones Industrial Average edged up roughly 0.3%.
Chinese and highly China sensitive stock markets had a really volatile session today — consistent with the view, which I see as correct (please see earlier posts, including over the last two weeks), that investors and traders were expecting way too much in terms of government… pic.twitter.com/M8w4F0hT2V
— Mohamed A. El-Erian (@elerianm) October 8, 2024
Oil prices came under pressure, decreasing about 4% as geopolitical tensions in the Middle East somewhat cooled and China announced fewer-than-expected stimulus measures. Prices retreated for both West Texas Intermediate and Brent crude. Investors also focused on monetary policy, with the New York Fed president stating that Federal Reserve policy is “well positioned” to achieve a “soft landing” for the economy.
Chinese shares soared to two-year highs in frenzied trade on Tuesday, extending a blistering rally as mainland markets reopened after a week-long break, while Hong Kong shares slid as investors walked back some of the stimulus excitement.https://t.co/dUiz3EteOa
— Lorenzo Lamperti (@LorenzoLamperti) October 8, 2024
Fed governor Adriana Kugler’s comments further sharpened investors’ attention on the upcoming CPI inflation report due Thursday, which will provide additional clues on the path forward for interest rates. Technology and consumer discretionary sectors led Tuesday’s gains, up about 1.4% and 0.8% respectively. Nvidia’s strong performance pushed tech stocks higher, helping the Nasdaq rise more than 1%.
Tech stocks boost amid oil dip
Energy lagged as crude oil dropped to just above $74 a barrel. The recent surge in Chinese stocks hit a speed bump on Tuesday.
Hong Kong’s Hang Seng Index faced its worst day since October 2008, dropping sharply after climbing around 20% over the past month. China’s CSI 300 also experienced volatility, ending the day up a modest 6% after an initial 10% rise. The stimulus announced on September 24 was initially met with optimism but underwhelmed investors.
At a press conference, China’s top economic planner, the National Development and Reform Commission, reiterated its commitment to further support in order to meet its economic goals, including an annual growth target. “The delayed response by Israel to counterattack could mean further talks may happen first,” said Dennis Kissler, Senior Vice President of trading for BOK Financial Securities. This, combined with the overbought condition of oil futures, suggests a corrective phase is underway, he noted.
Tuesday’s market movements highlight a return of investor focus to tech advancements, particularly in AI, amidst fluctuating oil prices and geopolitical developments. Upcoming economic data and policy decisions will likely chart the course for future market behavior.
