China's Stimulus Lifts Hong Kong Stocks, Aussie Dollar Gains

Hong Kong’s Hang Seng Index surged 3.2% to a four-month high after China announced new stimulus measures, including a 50-basis-point cut to bank reserve requirements. The Australian dollar hit a 2024 high following China’s moves, while the Reserve Bank of Australia left interest rates unchanged. Investors now await US inflation and payroll data to assess the direction of future Federal Reserve rate cuts.

Equities

The FTSE 100 rose 0.4% on Monday, rebounding after its worst day since August in the previous session. Gains were driven by commodity-linked stocks, particularly precious metal miners, which climbed more than 2% as gold prices reached new highs due to the Federal Reserve’s rate cuts and geopolitical tensions in the Middle East. Energy stocks, such as BP, added 0.6% as crude oil prices remained elevated. Meanwhile, AstraZeneca dropped 1.7% after disappointing results from a late-stage trial of its experimental breast cancer drug, which did not significantly improve overall survival rates. Currys, the UK electricals retailer, surged 8% after Berenberg upgraded its price target, citing confidence in the company's growth outlook and improving cash flow.

In the US, stocks closed slightly higher on Monday, following the Federal Reserve’s recent interest rate cut. The S&P 500 gained 0.28%, led by energy stocks with a 1.31% rise, while healthcare stocks saw a 0.25% decline. Tesla was one of the top performers, jumping 4.65%, while Meta Platforms rose 0.6% after Citigroup raised its price target. Intel climbed 3.05% following a report that Apollo Global Management had offered to invest up to $5 billion in the company. On the downside, General Motors slipped 1.72% after Bernstein downgraded its stock rating from “outperform” to “market perform.”

The Dow Jones rose 0.15%, and the Nasdaq Composite added 0.14%, with traders closely watching comments from Federal Reserve officials and awaiting upcoming inflation data. Markets are now split on whether the Fed will implement further rate cuts this year. Meanwhile, the Russell 2000, which tracks small-cap stocks, fell 0.25%.

Forex & Commodities

The euro fell 0.39% to $1.112 on Monday, following weak euro zone business activity data, with traders increasing their bets on a European Central Bank rate cut next month. The pound rose 0.2% to $1.3345, hitting its highest level since March 2022, after UK business growth slowed, though less sharply than in the euro zone. Against the yen, the dollar weakened by 0.37% to 143.38, following a two-week high of 144.50 last week, as the Bank of Japan kept rates steady.

The US dollar index edged up 0.05% to 100.83 after briefly hitting 101.23, bolstered by steady US business activity and rising prices, hinting at inflationary pressures ahead. Gold prices soared to a record $2,637.79 per ounce as tensions in the Middle East increased demand for the safe-haven asset.

Oil prices declined, with Brent crude down 0.8% to $73.90 per barrel and US crude falling 0.9% to $70.37.