In a curious move, China's five biggest state-owned banks have cut their deposit rates. It is the first major cut since late 2022, following recent surprise cuts in lending rates by China's central bank. The goal is to help banks deal with their shrinking profit margins and boost the slowing economy. More banks are likely to follow with similar cuts, as experts think China might cut lending rates further if the economy doesn't improve soon. It is in line with its continuing stimulus effort, where China is spending 300 billion yuan on a new economic stimulus programme. Most of this money will go towards upgrading equipment and encouraging people to trade in old consumer goods. For example, they're offering up to 20,000 yuan for car trade-ins. This is part of a bigger 1 trillion yuan plan to help struggling parts of the economy.
EQUITY
The stock market took a big hit, with the S&P 500 and Nasdaq taking the brunt of it. Weak earnings and guidance from big tech companies like Alphabet and Tesla drove investors to dump the stock for smaller caps. Tesla's stock reported lower profits, and Alphabet's ad growth slowed down even with better revenue, spreading pessimism to the whole tech sector. Japan, South Korea, and Hong Kong all fell significantly where tech companies in these countries following the pattern in the US.
GOLD
Gold prices slipped on the third session as traders possibly turned to the Japanese yen for safety, a carry trade that is expected as the Fed's rate cuts seem near. Some experts think that election uncertainty and global tensions could push more investors towards safe assets like gold, although it seems that the yen is more attractive. Jewellery stores are advertising a 10% price drop after new policies should make buying gold in India more appealing than getting it from places like Dubai.
OIL
Oil prices are down after eking out a small gain on Wednesday because China isn't buying as much and because of political uncertainty that will affect the Middle East conflict. Even though U.S. oil stocks dropped, traders are still anxious about the global oil market. Massive wildfires are burning in western Canada, hitting Alberta and British Columbia hard. A fire reached Jasper, Alberta, on Wednesday, forcing 25,000 people to evacuate while firefighters are trying to save key sites, including the Trans Mountain oil pipeline.
CURRENCY
The dollar slipped slightly as bets for a pause in September disappeared, indicating confidence in a rate cut. Upcoming U.S. economic data, including GDP and inflation figures, could confirm these bets on CME Fedwatch. Across the market, Japan's central bank likely spent about 6 trillion yen this month to boost the currency. Unlike before, they seem to be buying yen when the dollar is weak, not just when the yen is strong.
