Author: Bao Yilong
With China's reserve requirement ratio and interest rate cuts and confirmation of trade talks with the United States, risk appetite sentiment has significantly improved. Asian stock markets rose, with futures prices for iron ore, steel, and other commodities increasing. Risk aversion sentiment has receded, and the Federal Reserve's expectation of rate cuts this week has further weakened, causing the US dollar to strengthen and gold to drop sharply during the Asian trading session.
At 9 am on Wednesday, the State Council Information Office held a press conference where People's Bank of China Governor Pan Gongsheng simultaneously announced reserve requirement ratio and interest rate cuts, lowering the deposit reserve ratio of financial institutions by 0.5 percentage points and reducing the policy interest rate by 0.1 percentage points from the current 1.5% to 1.4%, while also lowering the housing provident fund interest rate 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 which he, as the Chinese lead negotiator for Sino-US economic and trade talks, will meet with the US lead negotiator, US Treasury Secretary Besson.
Ray Attrill, Head of Foreign Exchange Research at the National Australia Bank, said: "This indicates that both sides may have the willingness and enthusiasm for a high-level meeting, so I believe this is definitely a positive signal. This is obviously beneficial to the Asian foreign exchange market." The Federal Reserve will hold a meeting later on Wednesday to determine interest rates, with rate cut expectations weakening. Investors believe there is almost no possibility of the Federal Reserve taking action on Wednesday, and the probability of a rate cut in June is only 33%, lower than 64% a month ago.
Investor trading sentiment has warmed up, with risk asset prices rising across the board. Bitcoin prices jumped 3% during the Asian trading session, while Ethereum's price even soared over 4%. Safe-haven assets showed obvious weakness, with gold dropping more than $40 and falling below the key $3,400 level. The Swiss franc and Japanese yen depreciated by nearly 0.6%.
Asia-Pacific Stock Markets:
Optimistic sentiment drove Asia-Pacific stock markets higher, with the MSCI Asia Emerging Markets Index rising 0.4%. The Korean Composite Index rose over 0.5%, the MSCI Vietnam Index rose over 0.4%, and the FTSE Malaysia Index rose nearly 0.3%.
Currency Markets:
With positive tariff news and significantly reduced Federal Reserve rate cut expectations, the US dollar index rose nearly 0.3% during the Asian trading session.
Bitcoin surged 3% at the Asian market opening, approaching $98,000, with gains later moderating to 2%.
Commodities:
As risk aversion sentiment receded, gold dropped $40 during the Asian trading session, falling below the $3,400 per ounce mark, with intraday losses once exceeding 2%. At the time of writing, losses had narrowed to 1.2%.
Previously affected by tariff volatility, with the upcoming China-US trade talks, commodity futures such as cotton, soybeans, wheat, and iron ore all showed varying degrees of increase. CBOT soybeans, corn, and wheat rose over 1%.
International oil prices continued their overnight rebound trend, with WTI crude oil rising over 0.63% and Brent crude rising 0.50%. Natural gas surged 2%.
