Highs on the Horizon: China Stimulus Gives Miners a Boost

The S&P 500 and Dow both hit new record highs on Tuesday despite weak consumer confidence data. This time, mining stocks helped the market, jumping on the back of massive economic stimulus announced by China.

Initially, the indexes gave up some of their gains after the Conference Board released a report that showed an unexpected drop in U.S. consumer confidence for September. The decline was due to growing concerns about the health of the U.S. labor market.

"The main reason for today's gains was the news of support for China's stock market, as well as promises of future interest rate cuts. These announcements led to a sharp jump in international equities," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Hill said Chinese stimulus measures have also weighed on U.S. markets, particularly in sectors that are exposed to the Chinese economy, such as mining and metals, which have seen strong gains.

The Dow Jones Industrial Average (DJI) added 83.57 points (0.20%) to end the day at 42,208.22. The S&P 500 (SPX) rose 14.36 points (0.25%) to 5,732.93, while the Nasdaq Composite (IXIC) rose 100.25 points (0.56%) to 18,074.52.

Of the 11 S&P 500 sectors, five ended the day in positive territory, with material stocks posting the biggest gains, up 1.35%.

Metals prices jumped sharply after China, the world's second-largest economy, announced its biggest economic stimulus since the pandemic, seeking to lift the country out of a deflationary crisis.

Amid China's support measures, copper and lithium mining stocks showed notable gains. Freeport-McMoRan shares rose 7.93%, Southern Copper added 7.22%, Albemarle increased 1.97%, and Arcadium Lithium rose 3.2%.

Chinese companies listed on US exchanges also showed strong growth. For example, Alibaba jumped 7.88%, PDD Holdings rose 11.79%, and Li Auto gained 11.37%, reflecting positive sentiment in the domestic market.

Tech giants were mixed, with Nvidia rising 3.9% and Microsoft losing 1.15%. However, overall, the tech sector rose 0.79%. The Philadelphia SE semiconductor index rose 1.23%, led by gains in Qualcomm shares of 0.54% and Intel shares of 1.11%.

Fed Chair Michelle Bowman warned that inflation remains above the 2% target, calling for a cautious approach to further interest rate cuts.

This week, investors are focused on unemployment and personal consumption spending data, which could influence the Fed's next moves.

Among the notable moves in the market, Visa shares fell 5.49% after the U.S. Department of Justice filed a lawsuit against the company for possible antitrust violations. The move put significant pressure on the financial sector, which ended the session down 0.92%.

Despite the problems in the financial sector, the New York Stock Exchange saw most stocks finish the day higher. For every one that fell, there were nearly two that advanced, a ratio of 1.93 to 1. The NYSE posted 636 new highs and only 43 new lows.

The S&P 500 also showed positive dynamics, with 62 new 52-week highs and no new lows. The Nasdaq Composite posted 103 new highs but also 101 new lows, reflecting a mixed picture in the tech market.

Total trading volume on US stock markets was 11.42 billion shares, slightly below the average of 11.60 billion over the past 20 sessions. This shows that interest in the market is stable amid global economic changes.

A widely followed global stock index hit an all-time high on Tuesday, while copper prices rose to their highest in 10 weeks, driven by economic support measures announced by China, the world's second-largest economy.

The Chinese yuan hit a 16-month high against the US dollar, in response to economic support measures taken by Beijing. Following this, oil prices also rose to a three-week high, reflecting positive expectations in the world's largest crude importer.

The governor of the People's Bank of China, Pan Gongsheng, announced plans to lower borrowing costs and inject more money into the economy. Particular attention will be paid to reducing the debt burden on households, in particular by reducing mortgage payments. Among the planned measures is a 50 basis point reduction in bank reserve requirements, which should stimulate further economic growth.

China's economic support measures have had a significant impact on US markets. "News signals from China are reflected in US sectors, particularly cyclical sectors such as metals and mining, which have performed impressively," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Investors continue to closely monitor the Federal Reserve's actions, trying to predict its next move after the recent monetary easing, when the key interest rate was cut by 50 basis points.

The MSCI World Equity Index showed confident growth, adding 0.54% and reaching a record high of 844.56 points. The European STOXX 600 index also rose by 0.65%, supporting positive sentiment in global markets.

In commodity markets, oil prices continued to rise: US crude oil rose by $1.19, reaching $71.56 per barrel, and Brent crude rose by $1.27 to $75.17 per barrel. This growth was caused by positive economic news from China, the world's largest consumer of raw materials.

Copper also posted a strong gain on the London Metal Exchange, rising 2.7% to $9,802 a tonne. The session peaked at $9,825, the highest since mid-July. China's influence on the metals market was a key factor in the rally.

Gold continued to strengthen amid growing interest in safe haven assets, rising 1.15% to $2,658.69 an ounce. Meanwhile, the Chinese yuan strengthened 0.65% against the US dollar to $7.017.

The US dollar index extended its decline after data showed weak consumer confidence, raising expectations for further Fed easing.

The dollar index, which tracks the dollar against major global currencies such as the yen and euro, fell 0.57% to 100.35. Meanwhile, the euro gained 0.59% to $1.1178. The Japanese yen also gained against the dollar, with the American currency weakening 0.31% to 143.15 yen.

Treasury yields fell in choppy trading, as expectations of further interest rate cuts by the Federal Reserve became more likely amid weak economic data and waning consumer confidence.

The odds that the Fed will cut rates by 50 basis points at its November meeting have increased to 62%, up from 54% the day before, according to LSEG. At the same time, a more modest 25 basis point cut has a 38% chance.

The yield on the US 10-year Treasury note eased slightly to 3.733% in afternoon trading after earlier hitting a three-week high of 3.81%. The trend reflects growing market expectations that the Federal Reserve may take additional monetary easing measures in the near future.