Commodity prices were higher too, with oil prices, up around 1.5%
World stocks hit a record high on Tuesday after China unveiled stimulus measures to support its economy and stock markets, sending Asian and European shares up and triggering a jump in commodity prices.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden. He also said China will roll out structural monetary policy tools for the first time to help stabilise capital markets.
The moves sent Chinese stocks up, with the blue-chip CSI300 index and the Shanghai Composite index surging more than 4% each. Hong Kong’s Hang Seng Index climbed more than 4% to a four-month high.
Investor positioning (in China stocks) is underweight and stimulus measures would set up a positive backdrop over the coming months, according to Jefferies economist Mohit Kumar.
However, we do not think that it is a bazooka that would fundamentally change our outlook for China yet. More targeted measures supporting property and infrastructure would be required for a shift in our views.
Chinese stocks have been laggards in the Asian region, with the CSI300 index down 2.3% this year, having reached multi-year lows as piecemeal stimulus from authorities failed to galvanise its markets.
The pan-European STOXX 600 index gained 0.8%, with China-exposed mining and luxury stocks in the lead. The German blue-chip DAX traded just below all-time highs.
The MSCI world stocks index added 0.3% to hit a record high. Futures pointed to a higher open on Wall Street.
The upbeat mood sent commodity prices higher too, with oil prices, up around 1.5%. Copper prices climbed to a more than two-month high, aided by expectations of improving demand in top consumer China.
Iron ore futures trading on China’s Dalian Commodity Exchange recorded their biggest intraday gain in more than a year.
Gold prices paused after reaching a record high of $2,639.95 earlier as rising tensions in the Middle East drew safe-haven flows.
