Stock rally loses momentum, S&P 500 and Dow slip from records

China has just announced its largest economic stimulus package since the pandemic.

Jared Blikre of Yahoo Finance explains what the stimulus package means for stocks and commodities worldwide:

After the People’s Bank of China (PBOC) announced details of monetary stimulus and stock market support on Tuesday, the country’s benchmark index, the CSI 300 (000300.SS), rose 4.3% – the biggest jump since July 2020.

The national currency, the renminbi (CNH=X), lost 0.6 percent – ​​the biggest drop since the collapse of the Japanese yen in early August.

In the US, stocks rose, but the biggest impact was felt in commodities. Silver futures (SI=F) jumped over 4.5%, hitting a more than 10-year high. Copper futures (HG=F) – already on a nine-day high – posted their 10th consecutive gain, climbing to a two-month high.

The stimulus package is China’s latest attempt to pull its economy out of a crisis caused by a shaky real estate market and deflationary pressures. It includes more than $325 billion in measures, mostly through monetary – rather than fiscal – channels.

On Wednesday, Chinese stocks continued their rally. The Shanghai Composite (000888.SS) closed up 1.2 percent. However, there remains growing skepticism as to whether these measures will successfully lead to a turnaround in the economy.

Read more about the effects here.