To The Moon

China's stock market continues to soar, buoyed by a series of strong government stimulus measures.

$Alibaba(09988)$  $TENCENT(00700)$  $JD-SW(09618)$  $NIO-SW(09866)$  $HAIDILAO(06862)$  

🇺🇸 S&P 500: -0.12% 📉

🇺🇸 Nasdaq: -0.39% 📉

🇪🇺 Stoxx 600: 0.47% 📈

🇯🇵 Nikkei 225: 2.93% 📈

🇭🇰 Hang Seng: 3.55% 📈

🇨🇳 CSI 300: 4.47% 📈

🇸🇬 Straits Times: -0.25% 📉

The U.S. stock market declined, with the S&P 500 and Nasdaq Composite falling by -0.1% and -0.4%, respectively. Despite a better-than-expected core inflation indicator, the market has been digesting the potential for a soft economic landing, with both indices still close to recent historical highs.

U.S. personal consumption expenditures (PCE) year-on-year growth exceeded expectations, declining to 2.2%, the lowest level since February 2021, down from 2.5% in July and below the expected 2.3%. Month-on-month, the core PCE price index, personal income, and spending, along with revised University of Michigan consumer confidence and inflation expectations, all surpassed expectations, showing only a 0.1% increase.

The revised University of Michigan consumer confidence index was 70.1, above economists' expectations of 69.3, while inflation expectations stood at 2.7%, gradually decreasing from a peak of 3.3% in May.

Asia-Pacific markets rallied, with Hong Kong's Hang Seng Index and Shanghai's CSI 300 surging by 3.6% and 4.5%, respectively. This surge was fueled by the central bank's commitment to introduce more fiscal measures to achieve growth targets and a request for banks to further lower mortgage rates by at least 30 basis points by October 31, significantly boosting foreign investor confidence and local market sentiment.

Future Events:

On Monday, we will see the release of Japan's retail sales year-on-year and industrial production preliminary month-on-month data.

On Tuesday, comments from Federal Reserve Chairman Powell, U.S. JOLTS job openings, final values for S&P Global and ISM manufacturing PMI, EU CPI preliminary year-on-year, and final values for Japan's manufacturing PMI will be released.

On Wednesday, comments from Federal Reserve members will be closely monitored.

On Thursday, U.S. unemployment claims, final values for S&P Global and ISM services PMI, and final values for Eurozone services PMI will be of interest to investors.

💡 Things to Know Today: 💡

1. The Nikkei 225 stock index futures fell by 6% on Friday after いしば しげる Ishiba Shigeru, unexpectedly won the ruling party leadership election, raising expectations of interest rate hikes. This figure has been advocating for fiscal consolidation and other measures, and the yen's appreciation may pose a challenge for the Japanese stock market.

Ishiba Shigeru

2. First-tier cities in China have announced the easing of home-buying regulations in response to recent stimulus measures, with Guangzhou being the first to lift all restrictions, halting the review of buyer qualifications and no longer limiting the number of homes owned. Shanghai and Shenzhen have indicated they will allow more people to buy homes in suburban areas and allow others to purchase additional properties.

Ease of home buying regulation in China

3. Fitch Solutions' subsidiary BMI has raised its forecast for the ringgit to USD exchange rate at the end of 2024 from 4.55 to 4.00, predicting a 9.0% appreciation in the ringgit against the dollar by the end of 2025, reaching 3.55. The agency believes the Federal Reserve will continue its rate cut cycle in the coming months, further lowering the policy rate by 75 basis points in Q4 2024, following a previous cut of 50 basis points.

BMI

4. Private equity-backed mergers and acquisitions in the Asia-Pacific region, including Japan, have increased by 14% year-on-year to USD 105 billion, although the number of new deals has decreased by 43% compared to last year. This optimistic data is mainly attributed to the USD 16 billion acquisition of Australian data center provider AirTrunk. U.S. rate cuts and China's economic stimulus plans are expected to benefit private equity transactions in Asia, with lower financing costs and improved market sentiment likely making exits easier.

AirTrunk

5. St. Louis Federal Reserve President Alberto Musalem stated on Friday that the U.S. central bank should "gradually" lower interest rates, referring to last week's half-point cut as a "strong and clear message." He noted that accelerating the pace of rate cuts would be appropriate only if the economy or labor market weakens more than expected.

Alberto Musalem

✅ Key Points:

The S&P 500 index has risen 20% year-to-date, nearing historical highs. Investor hopes for a soft landing in the U.S. economy will be tested this week, with labor market data forthcoming after a series of disappointing employment reports. The market will pay close attention to comments from Fed Chair Powell regarding the economic outlook at the National Association for Business Economics.

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