Hang Seng Jumps 2% on China's $142 Billion Bank Boost

The Hang Seng Index surged 2% as news of a potential $142 billion capital injection into China's major banks lifted investor sentiment. This followed earlier stimulus measures aimed at revitalising China's economy, helping Asian markets rally despite overnight losses on Wall Street. Meanwhile, attention shifts to global markets with upcoming rate decisions from the Swiss National Bank and remarks from Federal Reserve and ECB officials.

Equities

The FTSE 100 fell 0.2% on Wednesday, weighed down by a decline in energy stocks as oil prices slipped. Mining companies helped limit losses, with precious metals and industrial miners rising on higher copper and gold prices. Among the day’s notable movers, Rightmove shares dropped 1.6% after rejecting an $8.1 billion takeover bid from Australia’s REA Group, describing the offer as “unattractive”. DFS Furniture, which reported a significant 65.7% slump in annual profits, initially saw its stock fall before recovering to post a 6.6% gain by the session's close.

In the US, the Dow Jones Industrial Average dropped 0.7%, while the S&P 500 declined 0.19%. The tech-heavy Nasdaq eked out a 0.04% gain, bolstered by Nvidia, which rose 2.14%. However, broader market sentiment was dampened by a weak consumer sentiment report, raising concerns about the US labour market.

Tech stocks were a rare bright spot, while energy stocks struggled. Amgen shares fell after reporting mixed data on two of its drugs, pressuring the Dow. Apple shares dipped 0.52% following news that iPhone sales in China had declined in August, while banking giants Citigroup, Bank of America, and JPMorgan Chase also dragged down the broader bank index, which fell by 0.93%.

US automakers Ford and General Motors both dropped by more than 4% after Morgan Stanley downgraded its recommendations on the companies, citing concerns over future performance. In contrast, Hewlett Packard Enterprise topped the S&P 500, gaining 5.14% after Barclays upgraded its stock rating.

Meanwhile, KB Home shares slumped 5.35% following a downbeat third-quarter earnings report. The volume of shares traded across US exchanges was lighter than usual, at 10.42 billion, below the 20-day average of 11.69 billion shares.

Forex & Commodities

The US dollar rebounded from a 14-month low against the euro, rising 0.68% to 100.91 after earlier touching 100.21, its lowest since July 2023. Against the Japanese yen, the dollar gained 1.03%, reaching 144.75, its highest level since early September. Meanwhile, the Chinese yuan dipped to 7.033 in offshore trading following a brief rally earlier in the week, as doubts grew over the effectiveness of China’s latest stimulus measures.

Oil prices fell sharply, with US crude down $1.87 to $69.69 per barrel and Brent crude dropping $1.71 to settle at $73.46, amid easing supply concerns in Libya. In contrast, gold hit a record high, reaching $2,670.43 per ounce, supported by expectations of further rate cuts by the Federal Reserve.

Economic data releases showed that new US home sales fell in August, while US consumer confidence dropped significantly, raising concerns about the labour market. Traders are increasingly pricing in the likelihood of another significant rate cut by the Federal Reserve at its upcoming November meeting.