• Global equity markets experienced a downturn as concerns over China’s economy persisted despite a record reduction in the country’s mortgage reference rate.
• Investors await key earnings reports and economic data releases, including Nvidia’s results and the Federal Reserve’s meeting minutes, amidst ongoing market volatility and geopolitical tensions.

Equity futures across the United States and Europe took a hit, mirroring the decline in Asian stocks, following China’s decision to reduce its mortgage reference rate. Despite this move aimed at bolstering the world’s second-largest economy, apprehensions lingered among investors.

On Tuesday, contracts for the S&P 500 and Nasdaq 100 benchmarks retreated, with US markets closed on Monday for a holiday. Meanwhile, futures for the Euro Stoxx 50 index also faced a downturn. This downward trend extended to Asian stocks, marking the first decline in four sessions.

Concerns were particularly focused on China, where stocks experienced fluctuations despite domestic banks slashing a key mortgage reference rate by a record amount. This maneuver signaled China’s efforts to support its struggling property sector and reignite demand. While an index of Chinese developer stocks saw gains, analysts like Willer Chen from Forsyth Barr Asia Ltd expressed skepticism, noting that the mortgage rate reduction might not significantly address the underlying issues.

Expectations for a substantial rebound in Chinese equities were tempered as gains fell short following the Lunar New Year holiday. However, increased trading volume in certain exchange-traded funds suggested continued support from state-backed funds, aiming to stabilize the market.

Also Read: Breaking: China’s Central Bank Slashes Mortgage Reference Rate in Record Move

Amidst these developments, all eyes turned to Nvidia Corp.’s earnings report on Wednesday, seen as a potential turning point for global equities. Investors are keen on assessing the company’s performance, particularly in light of its role in artificial intelligence developments and its market value surpassing that of Amazon.com Inc.

In Australia, BHP Group, the world’s largest miner, reported underlying profits below consensus estimates but noted healthy demand from its top customer, China. Additionally, Capital One Financial Corp.’s announcement of its acquisition of Discover Financial Services for $35 billion in an all-stock deal further stirred the market.

Looking ahead, investors are awaiting the release of the Federal Reserve’s January meeting minutes on Wednesday, along with Eurozone inflation data on Thursday. These events are anticipated to offer further insights into the direction of monetary policy and economic conditions.

In the commodities market, gold prices remained relatively stable around $2,020 per ounce, while West Texas Intermediate, the US oil price, edged higher amidst ongoing tensions in the Red Sea, a crucial trade route.

Overall, while the reduction in China’s mortgage reference rate aimed to shore up its economy, uncertainties persist, with investors closely monitoring corporate earnings and macroeconomic indicators for signals of market stability and growth prospects.