China Stimulus Disappointment Sinks Hang Seng by Over 10%

Hong Kong’s Hang Seng Index plummeted more than 10% as Beijing failed to deliver detailed stimulus measures, disappointing investors despite initial gains in mainland China. European stock futures also fell, with EUROSTOXX 50 down 0.8% and FTSE futures dropping 0.5%. Oil prices retreated slightly as tensions in the Middle East escalated, though fears of supply disruptions remain strong.

Equities

The FTSE 100 rose 0.3% on Monday, driven by gains in energy stocks as oil prices climbed on concerns over Middle East tensions. BP shares gained 1.3% after the company scrapped its 2030 target to reduce oil and gas output, with CEO Murray Auchincloss aiming to boost investor confidence by scaling back its energy transition strategy.

Shell shares rose 2.3%, despite reporting a 30% drop in refining margins in the third quarter due to weaker global demand. Meanwhile, precious metal miners fell 3.7%, marking their worst performance in over a month as expectations for a smaller US interest rate cut dampened the appeal of safe-haven assets.

In the US, all three major indices declined by about 1% on Monday. The Dow Jones Industrial Average dropped 398.51 points, or 0.94%, to 41,954.24, while the S&P 500 fell 55.13 points, or 0.96%, to 5,695.94. The Nasdaq Composite lost 213.94 points, or 1.18%, to close at 17,923.90. Amazon shares dropped 3% after a Wells Fargo downgrade, and Apple fell 2.3% following Jefferies’ decision to assign a "hold" rating.

Alphabet shares dropped 2% after a US judge ordered Google to overhaul its mobile-app business, sparking concerns about regulatory pressure. Meanwhile, the CBOE Volatility Index, often referred to as Wall Street's fear gauge, rose by 3.4 points to its highest level in nearly two months.

Energy stocks were the bright spot in US markets, with oil prices up due to Middle East supply concerns. Crude futures jumped 3.7%, marking their fifth consecutive rise. On the S&P 500, Generac Holdings saw an 8.52% increase in its stock price, with investors betting on strong demand for backup power generators ahead of Hurricane Milton.

Pfizer shares climbed 2% following a report that activist investor Starboard Value has taken a $1 billion stake in the company, while Air Products and Chemicals gained 9.5% on news that hedge fund Mantle Ridge had built a position in the firm.

Forex & Commodities

The US dollar remained steady near a seven-week high on Monday following last week's strong jobs data, which dampened expectations of aggressive US interest rate cuts. The dollar index slipped slightly by 0.07% to 102.46, following a surge last week, its biggest weekly gain in two years. Against the Japanese yen, the dollar fell 0.49% to 147.98, influenced by warnings from Japan’s top currency official.

Gold prices remained flat at $2,639.45 per ounce as markets awaited the Federal Reserve’s September meeting minutes and upcoming US economic data, such as the Consumer Price Index due this week. Oil prices retreated, with Brent crude down 1.6% to $79.62 per barrel and US West Texas Intermediate futures falling 1.7% to $75.85. This followed a sharp rally earlier in the week as fears of supply disruptions from the Middle East eased slightly.

Sterling fell 0.25% to $1.3083 after a recent decline triggered by comments from Bank of England Governor Andrew Bailey, hinting at a more aggressive approach to reducing borrowing costs. Meanwhile, the Canadian dollar weakened by 0.37% against the US dollar.