China stimulus boosts stocks, but crypto remains stagnant

China’s monetary easing and global market impact

On the macroeconomic front, China’s stimulus measures, designed to lower borrowing costs and boost economic activity, included cutting interest rates on existing mortgages by 0.5 percentage points and reducing the reserve requirements for banks, allowing them to lend more. These actions were complemented by steps to ease restrictions on borrowing to invest in stocks, which sent the Shanghai Composite Index soaring by more than 4% on Tuesday to close at 2,863.13 points.

The People’s Bank of China (PBoC) Governor, Pan Gongsheng, emphasized that these efforts aim to stimulate domestic demand and financial markets, bolstering investor confidence. As a result, global commodity prices, including Brent crude and copper, surged, with Brent crude rising more than 1.4% to nearly $74.28 a barrel, as of the time of writing.

European and U.S. equities rallied, with sectors linked to the Chinese economy seeing notable gains as China's stimulus fueled widespread risk-on sentiment. In London, the FTSE 100 closed up 0.28%, while the STOXX Europe 600 rose 0.65%. In the U.S., the S&P 500 gained 0.21%, the Dow Jones edged up 0.01%, and the Nasdaq advanced 0.55% in early trading.