The ASX notched only a small win today, gaining 10.50 points or 0.13% to 8,187.40.
The bourse made strong gains in early trading on the back of mining and materials stocks, jumping 0.6% in early trading to touch 8,226 points before the reality of Chinese stimulus measures brought the market back down.
Today, Chinese National Development and Reform Commission Chairman Zheng Shanjie announced Beijing would offer 100 billion yuan in government spending for next year and a further 100 billion yuan for construction projects.
The commitment fell well short of the multi-trillion-yuan levels analysts were perhaps expecting, but even more conservative estimates fell short.
UBS chief China economist Wang Tao indicated a package of 1.5 to 2 trillion yuan was more reasonable to expect in the near term, with potential for another 2 to 3 trillion yuan next year.
The ASX sectors were mostly in the green today, up between 0.65% and 1.40%. The exceptions were Energy, down 2.45%, and Materials, down 1.60%. Real Estate also lagged, down 0.50%.
The best-performing stocks today were Zip (ASX:ZIP) Co, up 6.07%, and Kelsian Group, up 4.39%.
Overall, the ASX200 has been essentially unchanged over the last five days and sits 1.19% below its 52-week high.
Outlook lifts ahead of earnings season
As markets absorb the impacts of conflict in the Middle East, Chinese stimulus and interest rate cuts, moomoo market strategist Jessica Amir reckons the stage is set for a strong earnings season in the US.
“Ahhhhh. That’s it. Relax the shoulders”. It seems that’s what investors are thinking with US markets rebounding from their worst session in a month.
Nvidia shares led the market higher rising 4.4%, adding US$160 billion in market value.
Most sectors rose, with the tech sector up 2.1%, consumer discretionary and communication services up more than 1% each, while the energy sector sank almost 3% after oil dropped like a stone.
Stocks were able to march up for a gamut of reasons.
Oil fell almost 5%, as did the US dollar and bond yields, as geopolitical tension subsided with markets awaiting Israel's strike back against Iran.
Investors are also looking forward to the US company earnings season getting underway. There is a good backdrop for markets to move higher despite the storm clouds.
Not only have US earnings expectations being downgraded, which sets up a runway to hurdle jumps, but outlooks for the year ahead have a good setup, thanks to employment and services growth, while the US central bank is cutting rates.
US earnings growth for the year ahead has been downgraded from 15% to 9.8%. That seems like a low bar.
If markets achieve that and there are no nasty surprises from US consumer or producer inflation metrics along the way, markets could take off.
The S&P/ASX 200 looks on track for its best year since 2021 thanks to China’s record stimulus and US rate cuts.
Our sister nation's central bank, the RBNZ, is expected to cut rates by 0.5% today to 4.75%, so keep your eyes on the Kiwi dollar trading at its lowest level since August.
China-facing stocks continued to see strong buying with the CSI 300 now seeing more institutional flows and buying power than US tech stocks.
Despite some investors being disappointed China did not announce a secondary bazooka of stimulus yesterday, with Hong Kong’s stock market falling more than 9%, some investors look past the noise as China is still stimulating.
So, they’ll keep buying global China-facing stocks seeing this as a once-in-generation opportunity.
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