Beijing announced measures to support the equities market
US stocks rallied on Friday as investors cheered Powell’s comments on strong economic growth as he cited especially robust consumer spending and early signs of a recovery in the housing market. Fed governor also reiterated the central bank’s commitment to pull inflation back down to its 2% goal. Despite hawkish comments, investors expressed optimism that the Fed is nearing the end of its rate-hiking cycle. The Dow Jones closed up 0.7%, the S&P 500 gained about 0.7%, while the tech-heavy Nasdaq Composite advanced 0.9%.
Asian equities mostly rallied on Monday, with Chinese shares leading gains as Beijing announced measures to support the equities market, lowering the stamp duty on stock trades for the first time since 2008. Also, Chinese authorities pledged to slow the pace of initial public offerings. After the announcement, the Shanghai Composite index surged 1.13%, while Hong Kong’s Hang Seng added 0.94%. China Evergrande Group bucked the trend, with the company’s stocks tumbling nearly 90% after its shares resumed trading in Hong Kong following a nearly 1.5-year break.
In Europe, stocks opened higher on Monday following an upbeat close in Asia after Beijing announced measures to aid its stock market. The pan-European STOXX 600 added 0.7% in early deals after posting its first weekly gain in four. Markets in the United Kingdom were closed for a summer bank holiday. US stock index futures rose slightly to start the final trading week of August. Investors are pricing in a nearly 20% chance that the Fed will hike rates again at its upcoming September meeting.
In currency markets, the dollar keeps oscillating around the 104.00 figure after a brief jump to fresh June highs around 104.45 on Friday. The greenback failed to stage a sustained rally despite some hawkish remarks from Fed’s Powell. Now, the safe-haven US currency lacks demand amid soaring risk demand as market participants are digesting supportive measures announced by Chinese authorities. Should the downside pressure intensify any time soon, the USD index may settle below the 104.00 mark in anticipation of fresh economic data out of the US, including PCE data and jobs report.