The unveiling by China of a new economic stimulus package overnight sent London-listed shares in miners and Asia-focussed stocks upward on Tuesday, as well as boosting overall global market sentiment.
Aimed at lowering borrowing costs and reducing restrictions on lending, the People's Bank of China said short-term interest rates and cash reserve requirements would be cut.
Cuts included an initial 0.5% reduction in reserve requirement ratios for banks, said to equate to US$142 billion (£106 billion), as well as lowering mortgage costs and minimum down payments on homes.
“This has positive ramifications for global markets,” XTB analyst Kathleen Brooks said.
“It should be good news for commodity producers, stocks with links to the Chinese and Hong Kong property market, and European companies that sell to the Chinese consumer”.
Anglo American PLC (LSE:AAL) led FTSE 100-listed miners higher with a 7% gain after an overnight surge in copper and iron ore prices on the back of the measures, while Asia-focused financial groups Prudential PLC (LSE:PRU) and Standard Chartered PLC (LSE:STAN) also jumped.
Shares in Burberry Group PLC (LSE:BRBY), LVMH (EPA:MC), Hermes International and luxury goods companies, which generate a large chunk of their sales from rich Chinese shoppers, all moved strongly higher too.
Brooks noted the package offered a “range of [...] sweeteners” for developers and lenders following a lacklustre property market recovery since the pandemic, in turn spelling good news for commodities.
Luxury brands were "enjoying the new found optimism over the potential spending habits of Chinese consumers, with the economic outlook for China taking a shot in the arm," said analyst Joshua Mahony at Scope Markets.
"It was the coordinated announcement that has caught markets off guard, with the decision to implement them all at once bringing a significant shift that many hope will turn the tide after years of slow growth and minimal inflation."
However, the range of measures were met with caution by some, given demand across China was still seen at a weak point.
Citing conversations with Asian investors, Citi analysts said there was “very little expectation” for a recovery soon, with the rate cuts rather feeding through next year.
Outlook on iron ore remained cautious, Citi said, and better for copper but worse for battery metals as markets awaited the effect of the measures.
Tickmill Group strategy partner Patrick Munnelly added: “When it comes to flashy bursts of credit-driven stimulus, it feels like we have been here before.
“And yet, China's housing crisis keeps getting worse and equity markets have performed poorly.”