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Markets Update: The Chinese stock market initially surged, but optimism faded as the government's stimulus details remained unclear. Global markets were impacted by Middle East tensions and a stronger US dollar.
Global Markets Roundup: 1 October 2024
Upon their return from an extended break, Mainland Chinese stocks had a strong start on Tuesday. However, the optimism was not reflected in regional share markets as Beijing did not provide more details about its significant stimulus package. Hong Kong stocks, in particular, experienced a decline on Tuesday, retracing some of the gains made during China's week-long National Day holiday closure.
The CSI300 blue-chip index in China surged by 10% in early trading to reach its highest level since July 2022, while the Shanghai Composite Index saw a similar increase, reaching its peak since December 2021. Conversely, Hong Kong's Hang Seng Index dropped by 7.6%, with the Hang Seng Mainland Properties Index falling by over 10%. This led to MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) declining by 2.2%. Mainland Chinese shares also gave up some of their initial gains during the trading day, following a press conference by China's economic planner Zheng Shanjie that lacked detailed information on the country's support measures. This lack of clarity disappointed investors, particularly those anticipating more specific fiscal measures to boost the struggling Chinese economy. The CSI300 index was up by 4.3%, while the Shanghai Composite Index slightly retreated to close 3.34% higher. FESX1! | Z1! | NI225 | NQ1! | ES1!
Concerns about escalating conflict in the Middle East dampened bullish sentiment after Hezbollah launched rockets at Haifa, Israel's third-largest city, and Israel appeared ready to escalate its offensive into Lebanon, one year after the Hamas attack on Israel that triggered the Gaza war. Stock futures saw a widespread decline, with EUROSTOXX 50 futures falling by 1%, FTSE futures decreasing by 0.6%, S&P 500 futures losing 0.03%, and Nasdaq futures dropping by 0.07%. In other markets, Tokyo's Nikkei fell by more than 1%. FESX1! | Z1! | NI225 | NQ1! | ES1!
In the currency markets, the dollar experienced a slight decline, dropping by 0.17% in comparison to the Japanese yen (USDJPY) to 147.95, while the British pound (GBPUSD) saw a slight increase of 0.06% to $1.30925. The US dollar weakened by 0.08% against a range of currencies, reaching 102.40, although it remained close to a seven-week high achieved on Friday. Meanwhile, the Chinese yuan (USDCNY) caught up and decreased in value against the strengthening dollar, which had advanced post the Friday jobs report. The yuan closed 0.76% lower at 7.0650 per dollar. EURUSDÂ | USDJPY | AUDUSD | DXY | NZDUSD
In the commodities market, oil prices retraced some of their recent gains following a surge on Monday driven by concerns over potential disruptions in supply. Brent crude futures BRN1! were down by 1.5% to $79.74 per barrel, after having surpassed the $80 mark for the first time in over a month during the previous trading session. U.S. crude futures CL1! also declined by 1.54% to $75.95 per barrel. Meanwhile, the price of spot gold GOLD remained relatively stable at $2,644.70 per ounce.
In the soft commodities sector, Coffee futures on ICE experienced a significant decline on Monday, as arabica dropped to a one-month low and robusta reached a more than one-month low. This decline was attributed to the forecast of beneficial rain in Brazil, the largest coffee producer globally. The December arabica coffee settled at $2.4465 per lb, marking a decrease of 4.9% or 12.7 cents, following a loss of almost 4.5% the previous week. Rainfall is anticipated in all major coffee-growing regions of Brazil this week, which is expected to support tree development during a crucial flowering phase for the 2025 production outlook. Brazilian brokers Carvalhaes mentioned that while the rains are likely to mitigate production losses, they may not fully restore production levels due to the impact of the historic drought. In a similar vein, November robusta coffee fell by 3.9% to $4,868 per metric ton after an 8% decline the previous week, with concerns raised about potential delays in the robusta harvest in Vietnam due to prolonged rain.
Meanwhile, March raw sugar settled at 22.55 cents per lb, down by 2% or 0.46 cent, as rain forecasts in Brazil, the top sugar producer, influenced prices. The scattered nature of the expected rains in sugar-producing areas, unlike in coffee regions, was noted by dealers. Additionally, the rise in oil prices due to geopolitical tensions in the Middle East supported sugar prices, as higher energy prices typically lead to an increase in the production of cane-based ethanol in Brazil and India at the expense of sugar. The impact of a strong dollar, typically unfavorable for agricultural futures, was also highlighted. December white sugar fell by 1.2% to $570.20 per ton.
In the cocoa market, March London cocoa closed at 4,443 pounds per ton, down by 1.5% or 68 pounds, although it remained above the eight-month low seen the previous week. The continuous influence of favorable weather in the top cocoa-producing countries of Ivory Coast and Ghana was cited as a factor weighing on cocoa prices. Notably, cocoa arrivals at ports in Ivory Coast experienced a significant decline compared to the previous year. Ivory Coast authorities intercepted 33 trucks transporting around 1,100 tons of smuggled cocoa beans from Guinea. December New York cocoa fell by 2.3% to $6,908 per ton, following a 15% decrease the previous week.
Prices of soybeans and corn decreased due to abundant supplies from the U.S. harvest and expectations of favorable weather in Brazil. According to an agricultural broker, wheat prices are receiving support due to reduced output in the Black Sea region. Moreover, there are concerns about adverse weather conditions affecting yields in Argentina and Australia. The most active wheat contract on the Chicago Board of Trade (CBOT) ZW1! rose by 0.1% to $5.93 per bushel. Soybeans ZS1! declined by 0.8% to $10.26-1/4 per bushel, while corn ZC1! fell by 0.4% to $4.24-1/2 per bushel. Russia's grain harvest is expected to be impacted by Ukraine's attacks on grain-producing regions near the border and adverse weather conditions in various regions, as per Agriculture Minister Oksana Lut cited by the RIA news agency on Monday. BRN1! | CL1! | GOLD | HG1! | KC1! | RC1! | CC1!
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team