TLDR:
- Chinese stocks rallied, with the CSI 300 Index closing up 3.6%
- President Xi Jinping emphasized technology development, boosting tech stocks
- The People’s Bank of China launched new measures to support the stock market
- Global shares edged higher, influenced by the Chinese rally
- Gold hit a new all-time high, breaking above $2,700
Chinese stocks experienced a rally on Friday, October 18, 2024, as new policy measures and supportive comments from President Xi Jinping boosted investor confidence. The surge in Chinese markets had a positive effect on global stocks, while gold reached a new all-time high.
The CSI 300 Index, a key benchmark for Chinese stocks, closed up 3.6%, rebounding from a three-day losing streak. Tech stocks were among the biggest gainers, with a gauge of Chinese tech stocks listed in Hong Kong rising more than 7% at its session high.
The rally was fueled by President Xi Jinping’s emphasis on technology development as a key driver of Chinese modernization. His comments led to substantial gains for chipmakers, with Semiconductor Manufacturing International Corp. and Cambricon Technologies Corp. both seeing 20% increases in their stock prices.
Adding to the positive sentiment, the People’s Bank of China (PBOC) announced new measures to support the stock market. These included a specialized re-lending facility to help companies buy back shares and a swap facility offering institutional investors liquidity to purchase stocks.
These moves demonstrated the central bank’s commitment to following through on promises made during a high-profile briefing in late September.
Xu Dawei, a fund manager at Jintong Private Fund Management in Beijing, commented on the market reaction:
“Xi’s remarks on tech have been the perfect trigger for a rebound that many had been waiting on the sidelines for. His remarks have great significance in showing the policy direction.”
However, the optimism was tempered by fresh economic data released on Friday, which showed that China’s economic growth slowed in the third quarter. New home prices also fell for the 16th consecutive month, highlighting the ongoing challenges in the property sector.
The positive momentum in Chinese markets had a spillover effect on global stocks. MSCI’s index of global stocks edged up a quarter of a percent, with European stocks also showing early gains. The rally in Chinese shares provided a welcome boost to investor sentiment worldwide.
Amid the market movements, gold reached a new all-time high, breaking above the $2,700 mark for the first time. This surge in gold prices reflects ongoing investor concerns about global economic uncertainties and geopolitical tensions.
In currency markets, the U.S. dollar index hovered close to an 11-week high against major peers, while the euro remained steady following the European Central Bank’s decision to cut interest rates by a quarter point on Thursday.
Oil prices, despite slight gains on Friday, were headed for their biggest weekly loss in more than a month due to worries about lower demand.
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