Market Overview – October 2024

The two engines of the global economy are boosting their economies · 9 October 2024

The combined effect of the American and the Chinese stimulus measures has injected new optimism into the markets. In China, accumulating weak economic data have pushed the government to act. After months of mixed signals, the Chinese authorities have finally committed to a vigorous recovery plan.  The People's Bank of China (PBoC) has taken bold steps by cutting interest rates, easing banks' reserve requirement ratio and providing support to banks to boost credit. Additionally, authorities are also focusing on supporting stock markets, with promises of a stock stabilization fund and strengthened incentives for property buyers. This aggressive approach sent China's stock market soaring, creating the biggest rally the country has seen in more than a decade. This surge also exerted pressure on certain "market-neutral" strategies on the Chinese market by involving short sales on the indices and therefore margin calls to be met, which probably also exacerbated this upward movement.  Investors welcomed the measures, which sparked optimism across Asia, boosting both Asian stocks and emerging markets in general. On the other side of the Pacific, the American Federal Reserve also shook the markets by reducing interest rates by half a percentage point. This decision, significant in its scale, comes amid concerns related to the slowdown of its economy. The Fed's decision is also part of a series of similar actions taken by central banks in other key economies, including Canada, the United Kingdom, Europe and New Zealand. It is clear that global central banks are adopting a more dovish stance, providing liquidity to markets rattled by economic uncertainty.

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Market Overview : October 2024 Survol des marchés : Octobre 2024