China's industrial profits rise by 20.4%! US stocks and Bitcoin both surge, with the Fed's interest rate cut probability approaching 90% in October.

After a series of disappointing data, China's industrial profits soared by 20.4% year-on-year in August, successfully reversing the 1.5% decline in July, significantly boosting market confidence in China's ability to achieve a 5% GDP rise target by 2025. This favourable information, combined with the U.S. core PCE data, adds weight to the Fed's potential interest rate cut in October, prompting strong rises in U.S. stock index futures and Bitcoin on Monday (September 29). Currently, the market's probability of a 25 basis point rate cut in October has risen to 89.3%.

Strong rebound in China's industrial profits reignites hopes for economic growth

As September draws to a close, global attention on China's economic data remains strong. According to data from the National Bureau of Statistics, China's industrial enterprises above designated size achieved a significant year-on-year profit growth of 20.4% in August, reversing the trend of cumulative profit decline that has persisted since May of this year. In the previous month of July, industrial profits had decreased by 1.5% year-on-year.

From January to August, the cumulative data shows that industrial profits rose by 0.9% year-on-year, although slightly lower than the 1.7% from January to July, the strong rebound in August effectively offset the weakness in other months. Among them, manufacturing profits rose by 7.4% year-on-year, becoming the key driver of the overall 0.9% cumulative growth, which also partially offset the weakness in other industries such as mining.

Analysis indicates that the increase in manufacturing profits occurs against the backdrop of U.S. tariffs impacting external demand, suggesting that the Beijing government’s efforts to address price wars, overcapacity, and deflation are starting to show results. This positive signal boosts investor confidence and helps alleviate market concerns about the Chinese economy losing momentum, indicating potential improvements in the labor market, rising wages, and growth in domestic demand.

Interest Rate Cut Expectations Rise: US Stock Index Futures All Rise

Boosted by positive economic data from China and the strengthening expectations of a shift in Fed policy due to U.S. inflation data, U.S. stock index futures collectively rose during trading on Monday morning (September 29).

· The Dow Jones E-mini rose 76 points.

· Nasdaq 100 E-mini rose 58 points.

· The S&P 500 E-mini rose by 13 points.

The rise in U.S. stock index futures continued the gains from Friday, September 26, mainly due to the year-on-year increase of 2.9% in the core PCE price index for August, unchanged from July, which supports the market's expectation that the Fed will cut interest rates in October. According to the CME FedWatch tool, the market's probability of a 25 basis point rate cut in October has risen from 87.7% on September 26 to 89.3% at the start of trading. As a result, the yield on 10-year U.S. Treasury bonds fell at the start of trading, while gold prices rose by 0.7% to $3,785, reflecting the market's bet on further easing policies.

Global Monetary Policy Shift: Fed Officials' Speeches in Focus

Central banks around the world have taken extensive easing actions. The Kobeissi Letter points out that in the past 12 months, global central banks have cut interest rates 168 times, marking the third highest record of this century, only behind 196 cuts in June 2020 and 249 cuts in October 2009.

Although the Fed is “one of the last central banks to join the global rate-cutting cycle,” the market expects it to have two more rate cuts by the end of the year. Therefore, market optimism will largely depend on whether Fed officials will reinforce these rate cut expectations.

Later today, Fed Vice Chairman John Williams and FOMC members Beth Hammack, Alberto Musalem, and Christopher Waller will deliver speeches. If their remarks lean dovish and support a rate cut in October, it will further boost market sentiment; conversely, if hawkish comments emerge, it may put pressure on U.S. stock index futures.

Bitcoin Technical Analysis: Breaking Through Key Resistance Levels in Progress

(Source: TradingView)

In the atmosphere of a strong rebound in the US stock market, the price of Bitcoin (BTC) has also found support at 108,680 and has begun a wave of recovery.

· Current Status: Bitcoin price has broken through the downtrend resistance line at 109,600, trading above 111,500 and above the 100-hour simple moving average.

· Major resistance: Around 112,500 is the first key resistance level and also the intersection point of another trend line. If the closing price can break through 112,700, the price is expected to further probe 113,700 or even 114,500.

· Main Support: The immediate support on the downside is at 111,300, with key support at 110,500. If this area is lost, the price may fall back to around 108,800, with the main support area at 107,500.

· Technical Indicators: The hourly MACD is accelerating in the bullish zone, and the hourly RSI is above the 50 level, indicating that short-term bullish momentum is accumulating.

Conclusion

China's strong industrial profit data has injected a dose of confidence into the global market, alleviating concerns about a slowdown in the growth of the world's second-largest economy and providing support for global risk assets. Coupled with the moderate performance of U.S. core PCE data, confidence in the Fed's interest rate cut in October has soared, driving the rise of U.S. stocks and risk assets such as Bitcoin. This week, traders need to closely monitor speeches from Fed officials, the Bank of Japan's policy stance, and U.S. labor market data to assess whether this wave of optimism can be sustained and smoothly transition into the fourth quarter. The global shift in monetary policy and the recovery of the Chinese economy are setting the tone for market trends in Q4.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make careful decisions.