Global Markets react to China's stimulus and oil volatility: Week 41 insights
09 October 2024

Li Xing Gan
Financial markets strategist
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Global markets are reacting to key developments in China, the US, and beyond. Trading expert Li Xing Gan breaks down how these shifts could impact your next move, from oil prices to tech stocks.
As global markets grapple with uncertainty, recent developments are driving sharp movements in stocks, commodities, and currencies. China’s scaled-down stimulus, a potential shake-up in Google’s dominance, and central bank actions from New Zealand and Australia are setting the stage for significant shifts in the trading landscape. For CFD traders, these updates offer both opportunities and risks across asset classes, from forex to indices and commodities. Here’s a look at how these headlines are impacting markets and what it could mean for your trading strategy.
China’s underwhelming stimulus shakes market confidence
China’s National Development and Reform Commission recently announced a 200 billion yuan stimulus package, a far cry from the larger economic support investors had hoped for. This modest effort has triggered a downturn in Chinese stocks and heightened concerns over the country's ability to reach its 5% growth target. Worries about the sluggish recovery, particularly in the property sector, continue to weigh on investor sentiment.
Impact on markets: The immediate reaction in Asian equities has been negative, with the Shanghai Composite Index and Hong Kong’s Hang Seng both seeing sell-offs. For traders, this market pullback may present short-term opportunities for those looking to capitalize on price fluctuations in Chinese stocks or indices. Additionally, commodities sensitive to China’s demand, like industrial metals, may face downward pressure, while the yuan could weaken further against major currencies, offering potential plays in the forex market.
US DOJ targets Google: A potential tech shake-up
In the US, the Department of Justice is considering recommending that Google divest parts of its operations, which could reshape the online search market. This antitrust move comes as regulators aim to curb Google’s monopolistic dominance, with decisions on how to proceed expected by August 2025.
Impact on markets: For tech stocks, particularly the big names in the NASDAQ, this is a significant development. If Google is forced to break up parts of its business, it could ripple through the broader technology sector, affecting not only Google’s stock but also its competitors. CFD traders may see increased volatility in the short term as speculation grows over the outcome of the antitrust case. Watch for potential movements in advertising-related stocks and indices that are heavily weighted toward tech.
New Zealand cuts rates again amid easing inflation
The Reserve Bank of New Zealand cut its official cash rate by 50 basis points to 4.75%, marking its second consecutive reduction as inflation cooled to 3.3% in Q2 2024. This decision reflects a cautious approach to managing the country’s economic excess capacity while keeping inflation in check.
Impact on markets: The kiwi dollar has seen a decline following the rate cut, which could provide interesting opportunities in the forex market, particularly against stronger currencies like the US dollar or Australian dollar. With inflation pressures easing, New Zealand equities could see a moderate boost, as lower interest rates tend to benefit stock markets. However, traders should remain cautious as any negative global sentiment could offset domestic gains.
Australia holds rates amid mixed signals
In Australia, the Reserve Bank (RBA) decided to hold interest rates steady, despite growing uncertainty around economic growth. While consumer confidence has shown signs of recovery, a stronger US dollar is putting additional pressure on the Aussie, limiting its upside.
Impact on markets: The Australian dollar may continue to struggle against the US dollar, offering forex traders opportunities to short the AUD/USD pair. Domestically, the decision to maintain rates may help support Australian equities in the near term, but global factors—especially China’s demand and commodity prices—will play a key role in shaping investor sentiment. CFD traders should keep an eye on consumer-related stocks and sectors tied to international trade.
Oil markets whipsaw on China concerns and US inventory surge
Oil prices have been volatile, balancing between concerns over China's demand outlook and escalating geopolitical tensions in the Middle East. The release of US crude inventories last week showed a 10.9 million barrel surge, far above market expectations, further complicating the picture for energy traders.
Impact on markets: Brent and WTI crude have pared gains, but the market remains susceptible to sudden price swings. For commodity traders, this ongoing volatility offers potential profit opportunities, but risk management will be key. Traders in energy-related stocks and CFDs should brace for potential spikes in oil prices if the Middle East situation escalates or if China’s demand surprises to the upside.
Key takeaways for traders: navigating a shifting landscape
- China’s stimulus miss: Lower-than-expected stimulus efforts have caused Chinese equities and commodities to pull back, presenting short-term trading opportunities.
- Google antitrust case: A potential break-up of Google could lead to increased volatility in tech stocks, especially for those heavily invested in advertising revenues.
- New Zealand’s rate cut: The NZD may weaken further, opening forex opportunities, while New Zealand equities could see some support from lower interest rates.
- Australia’s economic outlook: The RBA’s cautious stance and global pressures on the Aussie dollar offer a chance for forex traders to capitalize on AUD moves.
- Oil price volatility: Oil markets are facing dual pressures from high US inventories and China’s uncertain demand outlook, setting the stage for potential price swings.
In this dynamic environment, traders should remain flexible and be prepared to adjust their strategies as these global factors evolve.
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