China’s leaders have announced new measures aimed at boosting the country’s economy, leading to a surge in the market. With recent data indicating a slowdown in growth and business activity, Beijing has faced pressure to provide support, especially for the struggling property sector. Previous policy responses from authorities have left investors disappointed due to a lack of concrete measures. However, this latest announcement signals a fresh push to invigorate the post-Covid recovery and address challenges facing the property sector.
During a meeting led by President Xi Jinping, the 24-person Politburo acknowledged the current economic difficulties and challenges and emphasized the need for precise and effective macroeconomic regulation. They also called for efforts to expand domestic consumption and timely adjustments to real estate policies. While the measures announced were not as substantial as in the past, they have given investors a boost of confidence. Hong Kong experienced a nearly four percent jump, with real estate companies and tech giants leading the rally. Shanghai also climbed more than two percent, while other markets in the region also saw gains.
The market response was driven by investors’ belief that the Politburo meeting set a positive tone for future policy easing. The fact that there was no repetition of the message that housing is for living in but not for speculation further boosted confidence. However, some analysts caution that sustained market impact will require a series of strong and concrete steps.
The positive momentum in global markets also extends to the United States, where the Dow Jones has been on an eleven-day winning streak. Investors are increasingly confident that the Federal Reserve’s expected rate hike this week will be the last, given falling inflation rates and signs of a healthy economy. Strong corporate earnings also contribute to the positive sentiment.
In Europe, the European Central Bank’s policy decision is eagerly awaited, as some experts predict it is close to ending its tightening campaign. Economic activity in the eurozone contracted sharply in July, primarily due to manufacturing cuts.
The news of China’s measures has also led to an increase in oil prices, with both major contracts experiencing more than a two percent jump. The boost to demand from China’s economic measures contributes to the positive sentiment in the oil market.
Overall, the market rally driven by China’s fresh measures highlights optimism among investors regarding the post-Covid recovery. While the announced measures are not as substantial as in the past, they provide some support and boost market sentiment. However, analysts emphasize the need for sustained and concrete steps to have a long-lasting impact.
