Chinese stocks rallied on Wednesday, fuelled by rising expectations that Beijing will introduce additional stimulus measures to bolster economic growth. As anticipated, the People’s Bank of China kept key lending rates steady, maintaining the one-year loan prime rate at 3.10% and the five-year rate at 3.60%. Adding to investor optimism, senior Chinese officials, speaking at an investment summit in Hong Kong, reiterated their commitment to advancing capital market reforms and further opening the financial sector to foreign investors.
Wall Street traded in mixed fashion as investors reacted to Nvidia (NASDAQ:NVDA)'s latest earnings report. Despite the world’s largest semiconductor company by market capitalisation ($3.6 trillion) surpassing quarterly expectations and issuing strong forward guidance, its share price fell more than 2% in after-hours trading. This decline reflected investor disappointment, as many had hoped for even bigger surprises given Nvidia's pivotal role in the AI-driven market rally. The dollar strengthened against a basket of global currencies, buoyed by expectations that Trump’s policies could drive inflation, possibly constraining the Federal Reserve's (Fed) ability to implement rate cuts. Meanwhile, on the monetary policy front, Trading Economics added that Fed governors Michelle Bowman and Lisa Cook offered contrasting perspectives on inflation and the likelihood of additional easing in separate statements on Wednesday, highlighting a lack of consensus.
European stocks turned lower, as an escalation in the Ukraine-Russia conflict dampened global risk appetite. The Eurozone's STOXX 50 ended the session down 0.40%, while the pan-European STOXX 600 slipped below the flatline to close at 501. According to Trading Economics, equities sold off after reports that “Ukraine had launched UK-made missiles into Russian territory for the first time during the conflict. This came after Ukraine used US-manufactured ATACMS missiles earlier that same morning, coinciding with Russia broadening its criteria for deploying nuclear weapons.”
The FTSE/JSE All Share Index gained 0.89%, with major indices mostly firmer, while the top 40 added 0.84%, driven by further easing in South Africa's inflation, which fell to 2.80% in October—its lowest level since June 2020 and below the anticipated 3.10%. This reinforced expectations of a 25 basis points rate cut by the South African Reserve Bank later today. In a separate report, business confidence reached its highest level since the first quarter of 2022, although retail sales growth slowed to a five-month low in September. The rand weakened alongside other emerging-market currencies as geopolitical tensions between Russia and Ukraine dampened investor sentiment. At 18h00, Business Day reported that the local currency had weakened 0.64% to R18.13/$ and 0.45% to R22.99/£, but little changed at R19.09/€.
In commodities, WTI crude oil futures rose above $69 per barrel on Wednesday, as geopolitical tensions outweighed concerns about rising US crude supplies. Additionally, Reuters reported that “the US vetoed a UN Gaza ceasefire resolution, heightening fears of supply disruptions in the Middle East. However, gains were limited by signs of sufficient supply, with EIA data showing a 0.5 million-barrel increase in US crude inventories, surpassing expectations.”
Similarly, gold prices climbed for the third straight session, reaching a one-week high, fuelled by a weaker greenback and rising tensions between Russia and Ukraine, which boosted demand for safe-haven assets. Spot gold increased by 0.32% to $2 640.19 per ounce, while US gold futures rose by 0.50% to $2 643.70.
