LONDON – Major stock markets dropped yesterday and oil prices jumped as traders weighed fresh interest-rate cuts from China’s central bank, aimed at reigniting the world’s second-biggest economy.

Another record session on Friday on Wall Street failed to inspire a similar rally elsewhere, as main equity indices in Europe and Asia began the week lower. Shanghai edged up, however.

Haven investment gold reached a new all-time high on geopolitical concerns and uncertainty over the outcome of the upcoming US elections, analysts said.

Oil prices, which tumbled more than 8% last week, also won support from the Middle East unrest, as well as from hopes of increased demand from China – the world’s top importer of crude.

“The idea is that the move (on Chinese rates) will encourage lending and spending, and help mend the ailing property market,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“But there are still expectations that further fiscal stimulus will be needed.”

China’s central bank yesterday said it had slashed two key interest rates to all-time lows as part of a drive by authorities to revive spending and achieve their five percent annual economic growth target.

The move comes after figures last week showed China’s economy expanded at its slowest quarterly pace since the start of 2023, but still better than forecast.

Beijing has since last month unveiled a raft of measures to revive the economy, including rate cuts, an easing of home-buying rules, and pledges to support equity markets.

The announcements inspired a blockbuster rally in mainland and Hong Kong stocks, but some of those gains have been erased after a series of disappointing news conferences that failed to provide any detail or meaningful measures.

“Officials are gradually ramping up support to kick-start the economy – but the will-they-won’t-they of announcements has made the process a rollercoaster for markets,” Moody’s Analytics said yesterday.

In foreign exchange, the euro dropped versus the dollar, amid further signs of easing inflation in the eurozone.

Data yesterday showed German producer prices fell 1.4% year-on-year in September, boosting analysts’ expectations that the
European Central Bank would cut interest rates again in December. The dollar jumped also against the pound and
yen. 

– Nampa/AFP