Wall Street Futures Dip as China Stimulus Rally Fades

US futures pointed lower after Wall Street's modest overnight gains of 0.2% to 0.5%, following China’s stimulus-driven market surge, which saw Hong Kong's Hang Seng rise 3.1%. Mainland Chinese stocks extended Tuesday's rally, but optimism faltered across global markets as doubts emerged about whether the stimulus would tackle deeper issues. Meanwhile, weak US consumer confidence data tempered enthusiasm, raising concerns about global growth.

Equities

The FTSE 100 rose 0.3% on Tuesday, driven by China’s latest stimulus measures, which pushed shares of miners and luxury retailers higher. Leading the charge among industrial metal miners, Anglo American, Antofagasta, and Glencore gained between 4% and 7% as metal prices climbed on the expectation of increased demand from China. Burberry’s stock rose by more than 2%, buoyed by hopes of a resurgence in Chinese consumer demand. However, the FTSE 250 fell 0.4%, with Drax slipping 2.6% after revealing a potential $12.5 billion investment plan for biomass plants in the US over the next decade. Smiths Group saw a 5.2% drop after its acquisition announcements, while Dunelm fell 6.3% following a top shareholder’s sale of a nearly 5% stake.

Over in the US, both the S&P 500 and Dow Jones reached new record highs, with the Dow up 0.20% and the S&P 500 rising 0.25%. Mining stocks drove much of this growth following China’s announcement of a major stimulus package. Freeport-McMoRan jumped 7.93%, while Southern Copper added 7.22%. In the lithium sector, Albemarle climbed 1.97% and Arcadium Lithium rose 3.2%.

US-listed Chinese firms also performed well, with Alibaba jumping 7.88% and PDD Holdings surging 11.79%, tracking gains from China’s domestic market. Li Auto increased by 11.37%. Among US tech stocks, Nvidia advanced 3.9%, while Microsoft fell 1.15%. Chip stocks also posted gains, with Qualcomm and Intel rising 0.54% and 1.11%, respectively.

Visa’s stock fell 5.49% following a lawsuit filed by the US Department of Justice alleging antitrust violations, which impacted the broader financial sector, pushing it down 0.92%. Meanwhile, Federal Reserve Governor Michelle Bowman highlighted that inflation remained above the Fed’s target of 2%, emphasising the need for caution as interest rate cuts continue to be a focus.

Forex & Commodities

The euro rose 0.46% to $1.1163, while sterling climbed 0.37% to $1.3395, benefiting from the dollar’s weakness. The dollar index dropped 0.44%, reaching its lowest level in two weeks after soft US consumer confidence data for September.

Gold touched a new all-time high of $2,670.43 per ounce before settling at $2,658.80, reflecting continued safe-haven demand. Meanwhile, Brent crude futures slipped 13 cents to $75.04 per barrel, staying close to the previous session’s high, while US West Texas Intermediate crude dipped by 19 cents to $71.37.

In Australia, the Reserve Bank held rates steady, with the Australian dollar reaching a 14-month high of $0.6885 before slightly retreating. Analysts at Goldman Sachs described the RBA’s decision as a “mini pivot” towards a more dovish stance, leaving room for future rate cuts. Japan’s yen traded at 143.42 per dollar after the Bank of Japan signalled a cautious approach to further tightening.

The Federal Reserve’s interest rate decisions remain in focus after Governor Michelle Bowman highlighted concerns about inflation, reinforcing the cautious tone surrounding future US rate cuts.