Time to buy? It’s tempting to buy Chinese assets at significant discount. Alibaba, for example, jumped more than 7% on stimulus news yesterday in New York trading, but – or if you prefer ‘and’ – the company is down by 70% since its 2020 peak. Its PE ratio is just around 12 right now, compared to Amazon that trades more than 46 times its earnings. But it will take at least a few good economic reports to convince long-term investors that what’s been put in place is bearing fruit. After all, 2024 was marked by stimulus hints that led to a market rally, but resulted in disappointing stimulus measures and a selloff.

The best defense is a good offense.

Chinese companies reportedly cut off key supplies to the US and Europe necessary to build unmanned aerial vehicles for example, and the country opened a probe into Nvidia accusing the company for breaking their antimonopoly laws in the acquisition of Mellanox Technologies back in 2020. The latter could cost Nvidia as much as 10% of its prior year revenue. Nvidia shares took the hit yesterday: they fell 2.6%. Good news is, the percentage of Nvidia revenues that come from China has more than halved compared to pre-chip war levels. Being left in the crossfire is never good news, but the impact of the additional events decreases as the company gradually steps out of a market that’s once been so promising and lucrative.

FX & Commodities

Gold is up after a few stagnant weeks on news that the People’s Bank of China (PBoC) resumed buying gold after a 6-month pause – certainly to back a looser monetary policy and maybe to decrease exposure to US treasuries. The price of an ounce is testing the 50-DMA offers right now, near $2700 level, with potential to extend gains on the back of strong global political, geopolitical and economic uncertainties.

Crude oil, on the other hand, remained capped into the $69pb level at yesterday’s rally fueled by Syrian uncertainty and hopes of Chinese stimulus. The bulls' inability to capitalize on this mix of geopolitical tension and economic optimism underscores the prevailing strength of the bearish tide in the oil market. A further selloff to $65/67ob range is plausible.

Iron ore extended its advance to a 2-month high on Chinese stimulus hope but reversed early gains, while the AUDUSD couldn’t benefit from the Chinese news as the Reserve Bank of Australia (RBA) kept its policy rate unchanged at today’s meeting as expected, but sounded more dovish than expected. The officials, there, said that they are gaining some confidence that inflation pressures are easing. As a result, the AUD bulls may be losing an important ally but the RBA’s hawkish stance so far did little to limit the Aussie’s selloff. China’s ability to boost growth is more influent than what the RBA does.

Elsewhere, the US dollar extended gains yesterday, driven higher by flight to safety, but the greenback is softer this morning. The EURUSD saw support near 1.0530 on Monday, the USDJPY is preparing to test the 50-DMA to the upside – near 151 level and Cable is flirting with the 1.28 offers. While the Bank of England’s (BoE) more cautious stance due to the government’s pledge to extend spending looks supportive, the negative impact of the tax rises are being felt before the positive impact of spending on the economy. The latter could convince the BoE to adopt a more supportive policy and cap sterling’s upside potential against the greenback. But the pound should remain bid against the euro, aiming a further advance toward the 82 cents level as the US tariffs are expected to hit the EU economies more than they are expected to hit the UK’s.