China’s stock market experienced its strongest week since 2008, driving Asian shares to their highest level in two and a half years. This surge was largely attributed to Beijing’s launch of a substantial stimulus package aimed at revitalising the economy. The global outlook also benefited from a steep drop in oil prices, which supports the broader trend of disinflation.
Iron ore prices on the Dalian Commodity Exchange, a critical measure of anticipated demand in China’s steel industry, climbed more than 4.5% today, marking an almost 7.5% increase compared to the previous week. This rise is a key indicator of growing confidence in the Chinese economy’s ability to rebound.
Additionally, China’s President Xi Jinping convened a special meeting of the 24-member Politburo of the Communist Party to address the country’s economic challenges. The meeting focused on strategies to achieve the government’s target of 5% economic growth in 2024. While no specific measures were outlined at the time, the session concluded with a strong commitment from the Politburo and the party to reach the nation’s economic goals. One notable aspect of the discussion was the unusually candid mention of particular economic difficulties, which is rare in the party’s public communications.
The positive developments in China also had a favourable impact on European markets. Companies with significant exposure to Chinese business, such as those in the luxury goods, clothing, raw materials, and basic materials sectors, saw their shares rise considerably in response to the news.
China’s moves to stimulate its economy have injected optimism across global markets, particularly in Asia and Europe, showing that China’s economic actions continue to hold significant influence internationally.
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