Source: Sharecast
The People's Bank of China and key regulators unveiled plans to lower benchmark interest rates, in a coordinated effort to support domestic demand amid heightened trade tensions with the United States.
Those moves came ahead of high-level talks scheduled this week in Switzerland between US Treasury secretary Scott Bessent, trade representative Jamieson Greer, and their Chinese counterparts.
The discussions followed last month’s sharp escalation in tariffs by the Trump administration, which raised levies on Chinese imports to 145%.
China responded with its own set of retaliatory tariffs on US goods, increasing uncertainty around the trade outlook.
“Equity index futures climbed overnight as news of trade negotiations between China and the US boosted optimism that tensions between the world’s two largest economies might ease,” said TickMill market strategy partner Patrick Munnelly.
“Futures for the S&P 500 and Nasdaq 100 rose 0.6% after it was announced that US and Chinese officials would meet this week in Switzerland.
“European stocks were set to gain, while Asian markets edged up, supported by China’s decision to cut its policy rate to stimulate economic growth.”
Munnelly noted that the dollar index rebounded, breaking a three-day losing streak, while gold fell 1.4%.
“On Tuesday, India and the UK concluded a major trade deal, while Pakistan’s stock market plunged more than 6%.
“The forthcoming US-China meeting marks the first formal trade discussions since US president Donald Trump imposed sweeping tariffs last month, primarily targeting China.
“While the easing of trade tensions has provided a temporary lift to markets ahead of the Federal Reserve's rate decision on Wednesday, any sustained market rally will depend on the outcome of these talks.”
Most markets rise as investors look to US-China talks
China’s equity markets led regional gains, with the Shanghai Composite rising 0.8% to 3,342.66 and the Shenzhen Component up 0.22%.
Investor sentiment was buoyed by sharp rallies in select domestic stocks, including Harbin Xinguang Optic Electronics, Huafang, and Dazhong Transportation Group, each climbing more than 10%.
In South Korea, the Kospi 100 gained 0.8% to close at 2,559.62, supported by strong performances from Lotte Chemical, Hanwha Techwin, and Korean Air Lines.
Hong Kong’s Hang Seng Index rose 0.13% to 22,691.88, helped by a 6.68% surge in Link REIT and solid gains in Zhongsheng Group and AIA Group.
In Australia, the S&P/ASX 200 advanced 0.33% to 8,178.30, led by a 13% jump in Zip Co and strength in Polynovo and Magellan Financial.
New Zealand’s S&P/NZX 50 climbed 0.61% to 12,496.89, driven by a 27.63% spike in Manawa Energy.
Japan’s market was mixed.
While the broader Topix index edged up 0.31% to 2,696.16, the Nikkei 225 slipped 0.14% to 36,779.66, dragged down by steep losses in pharmaceutical names including Eisai and Sumitomo Dainippon Pharma.
In currency markets, the dollar was last up 0.55% on the yen, trading at JPY 143.23, as it gained 0.41% against the Aussie to AUD 1.5460, and advanced 0.35% on the Kiwi, changing hands at NZD 1.6703.
Oil prices edged higher, with Brent crude futures last up 0.42% on ICE to $62.41 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.61% to $59.45.
People’s Bank of China announces easing measures
On the economic front, China’s central bank announced a broad set of policy easing measures on Wednesday aimed at boosting domestic growth amid persistent trade tensions.
The People’s Bank of China said it would lower its key seven-day reverse repurchase rate by 10 basis points to 1.4%, a move expected to reduce borrowing costs across the financial system.
Speaking at a press briefing, the central bank’s governor Pan Gongsheng confirmed that the cut was likely to bring down the loan prime rate, China’s main benchmark for lending, by a similar margin.
The PBoC said it was also planning to lower the reserve requirement ratio for banks by 50 basis points, releasing roughly CNY 1trn (£103.84bn) in liquidity into the economy.
Reporting by Josh White for Sharecast.com.