China's economy is flashing warning signs, but can Beijing steer the world's second-largest economy to safety? To restore investor confidence, authorities have unveiled measures including tax cuts, eased curbs on property markets, and support for consumers and businesses. However, western investors remain sceptical as China grapples with real estate woes, weak spending, and softening investment that have encouraged outflows from the country. While interest rates were lowered to boost borrowing, banks held mortgage rates steady, underscoring Beijing’s balancing act. Tough challenges persist in reviving growth and stabilising markets despite pledges to boost consumption and support private firms. Overall, China faces an uphill battle to revive the economy and steady markets amid conflicting pressures.
Stocks rose Monday as investors reacted positively to Fed Chair Powell's comments suggesting the central bank may pause rate hikes, though it remains focused on lowering inflation. Major indexes posted gains led by 3M, Goldman Sachs, and Chinese companies, while Treasury yields declined ahead of inflation and jobs data this week.
Gold prices finished higher on Monday, supported by a stabilising dollar and Treasury yields after recent pressure, though gains were limited by continued ETF outflows. Prices held support around $1903 but need to break resistance at $1935 to confirm a sustained bullish trend, which depends on inflation cooling to prompt a Fed rate pause.
Crude oil prices have been rangebound around $80 as positive news on supply from countries like Iran and Iraq counters concerns over slowing demand from additional U.S. interest rate hikes. Investors remain cautious about China's economic recovery and the potential for the Fed to raise rates further to combat stubborn inflation.
The dollar index eased on Tuesday as traders resisted making big bets before upcoming economic data, while the yen struggled near levels that triggered intervention last year. The euro was up ahead of euro zone inflation data this week, recovering from a two-month low last week.