Daily Market Commentary 25th September 2024

The Peoples Bank of China stepped into the markets and added stimulus, in the form of reserve requirements for banks, by cutting rates by 50 basis points. This is an obvious attempt to stimulate the economy and had flow-on effects through global markets. European and US equities jumped on the news, while commodity currencies surged. Economic data coming out of the US points to troubled waters ahead. The Richmond Fed Manufacturing Index and the S&P Case-Shiller Home Price Index, both disappointed. There are warnings that the US may well follow Europe into recession, which prompted the Fed to their latest drastic action, while the Presidential election fast approaches. The weaker US Dollar pushed the EUR up to 1.1170, while the GBP looks to regain 1.3400.

The RBA left rates unchanged, in line with expectations, warning no rate cuts are likely in the near future. The RBA certainly sees elevated inflation levels continuing, but their rates remain below the Fed and RBNZ. This combined with the PBoC news was enough to see a surge in commodity currencies, with the NZD blasting through 0.6300, while the AUD approaches 0.6900. Local markets will closely monitor the Australian inflation number and global markets, will focus on US Q2 GDP growth data.