Major stock markets mostly dropped Monday on profit-taking and oil prices jumped as traders weighed fresh interest-rate cuts from China’s central bank aimed at reigniting the world’s second-biggest economy.
Another record session Friday on Wall Street failed to carry over into the new week and inspire a similar rally elsewhere, as main equity indices mostly moved lower.
“The weaker (but not weak) disposition is flowing from a posture of strength in the major indices that has invited some selling interest after some big gains,” Briefing.com analyst Patrick O’Hare said in a note to clients.
Haven investment gold reached a new all-time high on geopolitical concerns and uncertainty over the upcoming US election, analysts said.
But “no matter how one looks at things this morning, the overarching point is that there still isn’t a rush for the exits,” added O’Hare.
Oil prices, which tumbled more than eight percent last week, also won support from Middle East unrest, as well as from hopes of increased demand from China — the world’s top importer of crude.
“The idea is that the move (on Chinese rates) will encourage lending and spending and help mend the ailing property market,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“But there are still expectations that further fiscal stimulus will be needed.”
China’s central bank on Monday said it had slashed two key interest rates to all-time lows as part of an official drive to revive spending and achieve an five percent annual economic growth target.
The move comes after figures last week showed China’s economy expanded at its slowest quarterly pace since the start of 2023, but still better than forecast.
Beijing has since last month unveiled economy reviving measures, including rate cuts, an easing of home-buying rules and pledges to support equity markets.
The announcements inspired a blockbuster rally in mainland and Hong Kong stocks, but some gains have been erased after a series of disappointing news conferences that failed to provide any detail or meaningful measures.
“Officials are gradually ramping up support to kick-start the economy — but the will-they-won’t-they of announcements has made the process a rollercoaster for markets,” Moody’s Analytics said Monday.
But Trade Nation analyst David Morrison said the oil market’s momentum remains to the downside.
“Last week, OPEC+ and the US Energy Information Administration (EIA) yet again downgraded their forecasts for oil demand growth, citing China’s economic slowdown as the prime reason for the bearish view,” he said.
In foreign exchange, the dollar rose against other major currencies.
“The US dollar continues to find some love against the other majors,” said Morrison.
“This comes as probabilities shift towards a slowdown in monetary policy easing from the Federal Reserve, and the possibility of a quicker pace of rate cuts from both the European Central Bank and the Bank of England,” he added.
– Key figures around 1330 GMT –
New York – Dow: DOWN less than 0.1 percent at 43,238.86 points
New York – S&P 500: DOWN 0.1 percent at 5,857.10
New York – Nasdaq Composite: DOWN 0.2 percent at 18,456.51
London – FTSE 100: FLAT at 8,357.06
Paris – CAC 40: DOWN 0.5 percent at 7,577.98
Frankfurt – DAX: DOWN 0.6 percent at 19,541.65
Tokyo – Nikkei 225: DOWN 0.1 percent at 38,954.60 (close)
Hong Kong – Hang Seng Index: DOWN 1.6 percent at 20,478.46 (close)
Shanghai – Composite: UP 0.2 percent at 3,268.11 (close)
Euro/dollar: DOWN at $1.0855 from $1.0868 on Friday
Pound/dollar: DOWN at $1.3025 from $1.3047
Dollar/yen: UP at 150.02 yen from 149.45 yen
Euro/pound: UP at 83.35 pence from 83.30 pence
West Texas Intermediate: UP 2.0 percent at $70.04 per barrel
Brent North Sea Crude: UP 1.7 percent at $74.31 per barrel
burs-rl
