There has been a notable decline in orders, with China's manufacturing sector now in a state of contraction.

In September 2024, China's manufacturing sector saw a significant decline in activity due to a reduction in new orders, both domestically and internationally. The Caixin/S&P Global China manufacturing PMI index fell to 49.3, missing analysts' forecasts and marking the lowest level since July last year. In order to address this slowdown, the Chinese government implemented a series of aggressive stimulus measures, including interest rate cuts and the injection of liquidity into the banking system. While production levels remained consistent, new orders declined significantly, reaching a two-year low. The decline in export orders was attributed to a reduction in overseas demand, likely influenced by the United States' tariff increases on Chinese products and potential tariffs by the European Union on electric vehicles. Overall confidence among manufacturers was negatively impacted by concerns about the global trade outlook, resulting in the second-lowest level of optimism since data collection began in 2012. The aforementioned challenges have also resulted in a decline in input prices and costs.

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The recent reduction in interest rates has positioned gold for its strongest quarter in eight years.

Gold prices reached their highest level in eight years, driven by the US monetary easing programme which boosted the appeal of gold as an investment. Spot gold prices declined by 0.7% following the recent attainment of an all-time high. Gold has achieved a 14% gain this quarter, representing the strongest performance since 2016, and has risen by approximately 29% year-to-date. There is an increase in speculative demand for gold due to expectations of future interest rate cuts. Some banks anticipate that gold prices will reach $3,000 per ounce. The failure of Middle East peace talks, the decline in the labour market, interest rate cuts by the Federal Reserve, and additional stimulus from China will support the gold market. However, this rally has had an adverse effect on physical demand in China and India. Gold ETFs backed by physical metal are experiencing modest net inflows. Silver prices also rose, but there are warnings that this rally may not be sustained. Platinum prices fell 0.8%, while palladium prices fell 3.6%.

https://www.cnbc.com/2024/09/27/gold-silver-head-for-weekly-gains-on-us-rate-cut-momentum.html

The Japanese yen has shown resilience, while the US dollar has encountered some volatility as China seeks to stimulate its economy.

Following indications from Japan's new prime minister, Shigeru Ishiba, that monetary policy should remain accommodative, the yen's appreciation against the US dollar has stabilised. However, his assertion that policy should remain accommodative in light of prevailing economic conditions was sufficient to forestall any further strengthening of the yen. Analysts have also speculated that a potential general election in the coming months could exert downward pressure on the yen in the near term. Meanwhile, the Australian and New Zealand dollars are trading near their 2014 highs, reflecting investor optimism regarding an improvement in China's economic slowdown. This optimism is supported by interest rate cuts and expectations of fiscal support. In last week's developments, the US Federal Reserve's preferred inflation measure indicated a rate of 2.2%, which prompted a decline in US yields and the dollar. The Chinese yuan strengthened against the dollar on Beijing's stimulus measures, reaching a value of over 7 yuan per dollar in overseas trade.

https://www.cnbc.com/2024/09/30/yen-steadies-dollar-slips-as-china-reaches-for-stimulus.html