China’s equity markets rallied to near one-month highs after a Politburo announcement signaled a shift toward “moderately loose” monetary policy, sparking optimism among investors. While the statement lacked detailed measures, it emphasized boosting consumption to revitalize the economy. Global equities, including European mining and luxury sectors, gained as investors bet on potential economic recovery. However, concerns persisted over the policy’s ability to address underlying issues in China’s economy.
In contrast to the stock market’s enthusiasm, China’s bond market reflected skepticism, with yields dropping to record lows. Observers, including economist Michael Pettis, warned that past policies aimed at the supply side have exacerbated economic imbalances without stimulating domestic demand. Currency markets remained relatively flat, signaling caution over whether the policy shift would achieve sustained growth.
Meanwhile, global markets brace for key data and decisions this week. U.S. inflation data on Wednesday could shape the Federal Reserve’s next steps, while the European Central Bank, Bank of Canada, and Swiss National Bank are expected to announce rate cuts on Thursday. These developments will likely influence both equities and bond markets as investors assess global economic trends.