Author: Bao Yilong
As China cut its reserve requirement ratio and interest rates and confirmed trade talks with the United States , risk appetite has been boosted. Asian stock markets rose, and futures prices of iron ore and steel rose. Risk aversion has subsided, expectations of a rate cut by the Federal Reserve this week have further weakened, the dollar has strengthened, and gold has fallen sharply during the Asian session.
At 9 a.m. on Wednesday, the State Council Information Office held a press conference. Pan Gongsheng, governor of the People's Bank of China, announced a reduction in the reserve requirement ratio and interest rates. The deposit reserve ratio of financial institutions will be reduced by 0.5 percentage points, and the policy interest rate will be reduced by 0.1 percentage points, from the current 1.5% to 1.4%. At the same time, the housing provident fund interest rate will be reduced by 0.25 percentage points . Earlier today, the Ministry of Foreign Affairs stated that Vice Premier He Lifeng will visit Switzerland from May 9 to 12. During the visit, Vice Premier He Lifeng, as the Chinese leader of Sino-US economic and trade, will hold talks with the US leader, US Treasury Secretary Benson .
"It suggests there is perhaps a willingness and enthusiasm on both sides to have a high-level meeting, so I think that's definitely a positive sign. It's obviously positive for Asian FX markets," said Ray Attrill, head of FX research at National Australia Bank. The Federal Reserve meets later on Wednesday to set interest rates, with expectations of a rate cut muted. Investors see little chance of a Fed move on Wednesday, with just a 33% chance of a rate cut in June, down from 64% a month ago.
Investor trading sentiment warmed up, and the prices of risky assets all rose. The price of Bitcoin jumped 3% at the opening of the Asian session, and the increase of Ethereum once soared by more than 4%. The trend of safe-haven products was obviously weak, among which gold fell by more than $40, falling below the key price of 3,400. The Swiss franc and the Japanese yen depreciated by nearly 0.6%.
Asia Pacific Stock Markets:
Optimism drove Asia-Pacific stock markets higher, with the MSCI Asia Emerging Markets Index up 0.4%. The South Korean Composite Index rose more than 0.5%, the MSCI Vietnam Index rose more than 0.4%, and the FTSE Malaysia Index rose nearly 0.3%.
Currency Market:
The tariff news was positive, and expectations for a rate cut by the Federal Reserve weakened significantly, with the U.S. dollar index rising nearly 0.3% during the Asian session.
Bitcoin surged 3% at the opening of the Asian session, approaching $98,000, and then the increase fell back to 2%.
Commodities:
As risk aversion faded, gold fell by $40 during the Asian session, breaking the $3,400/ounce mark, with the intraday decline exceeding 2%. As of press time, the decline has narrowed to 1.2%.
The tariff turmoil previously hurt macroeconomic sentiment. As China and the United States are about to advance trade talks, commodity futures such as cotton, soybeans, wheat, and iron ore have all risen to varying degrees. CBOT soybeans, corn, and wheat have risen by more than 1%.
International crude oil prices continued their overnight rebound trend, with WTI crude oil rising by more than 0.63% and Brent crude oil rising by 0.50%. Natural gas rose by 2%.
