China announced major stimulus measures to jumpstart consumption, with six agencies rolling out 19 initiatives, including a CNY 500 billion re-lending program and expanded pension support. Premier Li Qiang’s vow to “forcefully boost consumption” triggered a broad rally in Asian markets with 117 Chinese stocks hit 52-week highs. Financials, especially brokers and insurers, led gains, while Guotai Junan jumped 198% on crypto trading approval. Mainland investors poured $1.22 billion into Hong Kong stocks, accounting for 53% of trading volume. The moves correspond to a desperate need to revive investor confidence and the return of “animal spirits” to China’s economy.
EQUITY
Stocks maintained its Wednesday gain, with the the S&P 500 remaining flat at 6,092.2, while the Dow fell slightly at 0.3%. Technology stocks, led by Nvidia's record high after gaining 4.3% contrast the declines in real estate and other defensive sectors. The risk for another rate adjustment had also helped SMCI to become the top gainer, a day after announcing $2 billion in note issuance, indicating intent to expand its AI server business.
GOLD
Gold recovered higher in Asian trade thanks to a weaker dollar even though ceasefire reduced demand for safe-haven commodity. The metal found support from sustained central bank demand and political pressure on the Federal Reserve to cut rates, although Fed Chair Jerome Powell caution inflation could regain footing.
OIL
Tensions easing in the Middle East have traders focus again on supply and demand with U.S. inventories falling more than expected, down 5.8 million barrels, showing strong summer demand, especially for gasoline. Even so, OPEC+ is set to boost output next month, and production is rising in Canada, the U.S., and South America. Risk remains in Iran-Israel ceasefire fragility, with markets now watching the July OPEC+ meeting for clues on future supply.
CURRENCY
The dollar index crashed to a three-year low around 97.5, with over 60 basis points in Fed rate cuts by year-end forecasted, pressured by President Trump's attacks on Fed Chair Powell, including reports that he may replace Powell as early as September. The Chinese yuan in turn hit seven-month highs, while the euro reach its strongest level since November 2021 along the Swiss franc climbing to a decade high.
