US Inflation Data and China Stimulus Shape Market Sentiment

Investors await US inflation data, which could alter Federal Reserve rate cut expectations after strong jobs data last week. Chinese stocks surged on Thursday, with the CSI300 index up 3.5% and Hong Kong's Hang Seng climbing 4%, as markets anticipated fiscal stimulus announcements in a Saturday press briefing. The People's Bank of China’s 500 billion yuan facility helped revive market confidence, particularly in property and mining sectors.

Equities

The FTSE 100 rose by 0.7% on Wednesday, marking its best performance in nearly three weeks after a tough session the previous day. The real estate sector was a key driver of the rebound, climbing 0.9%, while construction and materials added 2.3%. However, homebuilders continued to struggle, with Vistry Group falling further after a 24% drop the previous day. At least six brokerages, including Barclays and Citigroup, cut their price targets for Vistry following its profit warning.

Packaging company Mondi saw its stock rise by 4% after agreeing to acquire Schumacher Packaging’s assets in Germany, Benelux, and the UK for €634 million. CMC Markets slipped by 0.5% after initially gaining earlier in the day, having reported a 45% rise in first-half net operating income.

Across the Atlantic, US markets also had a strong session. The Dow Jones Industrial Average climbed 1.03%, while the S&P 500 and Nasdaq rose 0.71% and 0.60%, respectively. Wall Street’s gains were supported by the release of Federal Reserve minutes from its September meeting, which showed a "substantial majority" of officials favoured a half-point rate cut. Alphabet shares, however, fell 1.5% after news that the US Department of Justice may seek to force Google to divest parts of its business, including Chrome and Android, due to its dominance in search.

Boeing shares dropped 3.4% after talks with its key manufacturing union broke down, raising concerns about potential disruptions to production. Norwegian Cruise Line, on the other hand, surged 10.9% following an upgrade from Citi to “buy,” while Carnival and Royal Caribbean also saw gains of 7% and 5.2%, respectively. In the lithium sector, Arcadium Lithium shares soared 30.9% after Rio Tinto announced a $6.7 billion all-cash deal to acquire the company, positioning itself as the world’s third-largest lithium producer.

Forex & Commodities

The US dollar strengthened to a 10-week high against the yen, reaching 149.54 yen. This rise comes as traders scaled back expectations for aggressive Federal Reserve rate cuts following strong US jobs data. The dollar index also held near a two-month peak at 102.89, as markets awaited the US Consumer Price Index (CPI) release, which could impact inflation outlooks. The euro remained flat at $1.0940, near its lowest since mid-August.

Gold edged up 0.2% to $2,613.70 per ounce after a six-day losing streak. The precious metal’s movement was cautious ahead of the CPI data, with traders speculating on how inflation figures might influence Federal Reserve policy. US gold futures also rose by 0.2% to $2,630.80.

In the oil market, prices fell after US crude inventories increased by 5.8 million barrels, pushing Brent crude down by 60 cents to $76.58 per barrel. US West Texas Intermediate (WTI) futures also dipped by 33 cents to $73.24 per barrel, despite support from declining gasoline and distillate stock levels. Rising US supplies outweighed concerns over potential disruptions from Hurricane Milton and tensions in the Middle East, particularly the risk of an Israeli attack on Iran’s oil infrastructure.

Meanwhile, the Australian and New Zealand dollars rebounded slightly following declines earlier in the week, supported by improved sentiment in Chinese markets and central bank moves in the Asia-Pacific region.