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Chinese equities have surged to their best week since 2008 after Beijing launched an economic stimulus package including a $114bn war chest to boost the stock market.

The CSI 300 index of Shanghai- and Shenzhen-listed companies is up 15.7 per cent for the week in its best performance since November 2008, when China announced a similar stimulus package in response to the global financial crisis.

The rally, which has also helped buoy European markets and industrial metals, comes as China’s leadership rushes to support the country’s capital markets, stabilise a property sector crisis and boost domestic consumption in order to meet its economic growth target of 5 per cent for the year.

On Tuesday, the People’s Bank of China unveiled an Rmb800bn ($114bn) lending pool for the country’s capital markets, comprising funds to lend to companies to buy back their own shares and to lend to non-bank financial institutions such as insurers to buy local equities.

The CSI 300 index closed up 4.5 per cent on Friday while Hong Kong’s Hang Seng index rose 3.6 per cent, up 13 per cent since the start of the week in its biggest weekly gain since October 1998 during the Asian financial crisis.

“We are at a pivotal moment for the Chinese economy and its equities market,” said Nicholas Yeo, head of China equities at Abrdn, who said in a note that the US Federal Reserve’s recent interest rate cut would also be a significant tailwind.

“Global easing conditions are poised to bolster consumption, which is a boon for China, the world’s largest exporter.”

Hopes for more stimulus in China helped lift European stocks. The region-wide Stoxx 600 hit a fresh record high on Friday, pushed higher by luxury groups that would benefit from stronger consumer spending in China.

The China rally followed Wall Street gains after the S&P 500 closed on Thursday at a record high for the third time this week, with equities climbing ahead of Friday’s inflation report.

Chinese authorities in August restricted the daily northbound data through the Hong Kong Stock Connect programme that shows foreign investor flows into mainland stocks.

But Citi said the past three days were “the busiest period for Citi’s equities sales and trading team in the Asia region, with record client flows” into Hong Kong and mainland Chinese equities.

The Shanghai Stock Exchange put out a notice on Friday warning investors of “abnormally” slow transaction speeds as a result of frenzied morning trading, said two people familiar with the situation.

“We can’t dismiss this as the same old policy,” said Winnie Wu, equity strategist at Bank of America. “This is the first time that the government is encouraging leveraged investment in the stock market. A liquidity-leveraged rally should still have significant room to go.”

David Chao, a global market strategist at Invesco, said the rally in Chinese stocks could be sustained. “China markets are about momentum, and I see certain parallels between the existing rally and that of the 2014-15 rally,” when Shanghai’s index rose about 150 per cent between June 2014 and June 2015 but then collapsed.

Chao added that, as the dollar continued to weaken on the back of interest rate cuts from the Federal Reserve, he predicted “possible rotation out of the expensive and crowded global tech trade into cheaper [emerging market] assets”.

The stimulus measures this week have propelled most commodity prices higher, with the notable exception of oil, which has been damped by news of Saudi Arabia preparing to increase output. 

In particular, industrial metals such as copper, aluminium and zinc, of which China is a huge consumer because of its vast manufacturing sector, have surged, building on a rally that started earlier this month.

Copper, which is used heavily in the final stages of construction for electrical wiring, has gained more than 5 per cent since Tuesday to break through the $10,000 per tonne mark and reach its highest level in three months. 

For iron ore, a steelmaking ingredient, the stimulus measures have helped trigger a rebound after a slide in price to a two-year low that was largely driven by weak consumption of steel.

“In a commodity where expectations were negative, such as iron ore, this marks a clear turn,” said Colin Hamilton, commodities strategist at BMO. “We see this as a clear reflation trade, but the question will be whether it is enough to boost weak consumer sentiment.”

Former President Donald Trump is scheduled to meet Ukraine’s President, Volodymyr Zelensky, as tensions rise between the two men over how the future defense of Ukraine against Russian invasion will be conducted if Trump wins the U.S. election.

Trump has long argued that Vladimir Putin would not have dared invade Ukraine if he had been president at the time of the invasion in February 2022. He referred to Zelensky as a “salesman” for securing U.S. financial and military assistance for Ukraine, worth over $175 billion according to the Council on Foreign Relations.

In addition, Trump praised Russia’s historic military victories this week and called for the U.S. “to get out” and end its involvement with Ukraine-Russia conflict. Speaking Wednesday in North Carolina, Trump referred to Ukraine as “demolished” and its people as “dead.”

“Any deal—the worst deal—would’ve been better than what we have now,” Trump said. “If they made a bad deal it would’ve been much better. They would’ve given up a little bit and everybody would be living and every building would be built and every tower would be aging for another 2,000 years.”

According to Trump, it was Zelensky’s office who approached him for the visit which is set for 9.45 a.m. Eastern Time on Friday at Trump Tower in New York. Trump said in a news conference Thursday “I look forward to seeing him tomorrow. I believe I will be able to make a deal between President Putin and President Zelensky, quite quickly.”

The timing is significant for the U.S. election.

Clear political battle lines have already been drawn between Democrat rival Harris and Republican Trump over the future of U.S. support for Ukraine and the nation’s role as the main contributor to NATO. The U.S. is due to contribute up to $755 billion in 2024 according to the international defense pact’s own estimates.

In keeping with President Biden’s stated foreign policy goals, Harris reinforced her continued support for NATO and Ukraine when she accepted her nomination for candidacy in August. Trump, however has remained highly critical, even threatening to withdraw intelligence cooperation and military assistance to NATO members who in his view don’t pay their fair share.

Friday’s meeting almost wasn’t scheduled to go ahead despite Zelensky’s office stating it had been planned during the Ukrainian leader’s visit to the U.N. General Assembly, during which he is making an endgame pitch to his international allies.

In an interview with The New Yorker, Zelensky suggested Trump oversimplifies the conflict and does not understand Ukraine. The Ukrainian leader further explained his position that Trump’s running mate JD Vance was “too radical” by advocating for Ukraine to “make a sacrifice” by “giving up its territories.”

Harris on Thursday stood alongside Zelensky and said Trump’s push for Ukraine to quickly cut a deal to end the war were “not proposals for peace,” but “proposals for surrender.” Trump on Thursday said he was not advocating for a surrender.

While Trump and Vance have long been skeptics of U.S. backing for Ukraine, other Republican allies of the former president have backed Kyiv’s defense against Moscow’s invasion and argue supporting Ukraine is still in America’s interest.

This article includes reporting from The Associated Press