Nasdaq 100 Pushes Higher as China Unleashes the Next Wave of Stimulus

Also, 30-year T-bond, copper, crude oil and Japanese yen futures

1. Nasdaq 100 E-mini futures (/NQ): +0.22% 

2. 30-year T-bond futures (/ZB): -0.88% 

3. Copper futures (/HG): +3.02% 

4. Crude oil futures (/CL): +1.88% 

5. Japanese yen futures (/6J): -0.50% 

Equity markets pointed higher this morning, with Nasdaq futures (/NQZ4) leading the pack. Real estate stocks are also continuing their upbeat performance following last week’s interest rate cut. Asian and European equity markets caught bids overnight after China’s central bank—the People’s Bank of China (PBOC)—released new stimulus measures to boost economic growth amid domestic deflation. The PBOC cut its RRR, or reserve requirement ratio, by 50 basis points. Economically sensitive assets, such as crude oil and copper, responded positively to the new measures.  

Nasdaq futures (/NQZ4) rose about 0.22% at the New York open. Chinese-listed U.S. stocks performed well in the pre-market session, with Alibaba Group (BABA) gaining over 6% just ahead of the opening bell. JD.Com F(JD) put in an even better performance, rising nearly 10%, putting it on track for its best gain since May. Deere & Co (DE) managed to gain nearly 2% to bring the stock near its 2024 high despite former President Trump vowing to slap the company with big tariffs if it moves production to Mexico.  

Bonds moved lower across the curve as economic concerns continued to calm after the Federal Reserve invoked a 50-basis-point interest rate cut last week. The treasury will auction off two-year notes today. The 30-year T-bond futures contract (/ZBZ4) fell 0.8%, leading the pack in bond selling. Its underlying yield is approaching the highest level since early September. Fed President Neil Kashkari is set to speak later today. The Fed voter supported the rate cut at last week’s meeting.  

Copper futures (/HZZ4) rose more than 3%, as traders digested news from China. The Asian economic engine is the largest consumer of copper in the world and therefore drives a lot of the narrative for the metal. Today’s gain is the largest daily percent increase since early May. A weaker dollar is also providing a tailwind for not only copper but gold and silver as well.  

Crude oil prices (/CLZ4) was another asset that benefited from China’s central bank. Oil traders have been concerned about the country’s refining activity, which is a vital point in the oil complex for prices. The move by China will likely help support economic growth, in turn helping economically sensitive oil prices. If it translates into higher oil imports, we could see China come back as a major bull theme for the commodity. The American Petroleum Institute (API) will report inventory data today.  

The Japanese yen (/6JZ4) fell today as other major currencies gained. The move out of China is helping to revive sentiment for emerging market currencies, and traders are now hesitant that a yen carry trade could be revived. Traders are concerned about the yield differential—the difference between U.S. yields and Japanese yields—not supporting the yen even after the Fed cut rates by 50-basis points.  

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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