US Fed cuts rates, boosting Asia and China markets

Asian equity markets experienced a significant uptick following a 0.50% rate cut by the US Federal Reserve. Hong Kong's market outperformed, driven by gains in internet and real estate sectors, while all sectors in Mainland China saw positive movement, except for Health Care. The US rate cut is seen as a precursor for China to implement further cuts and stimulus measures, with state-backed investors holding a record-high of over RMB 3 trillion in A Shares, indicating a strong commitment to support the equity market. The performance of home appliance stocks was notably boosted by Midea's IPO, which surged 8.7% on its second trading day, marking it as Hong Kong's largest new listing in years. The White House is also pushing for changes to the 'de minimis' rule regarding tariffs, which could face opposition from industry groups. Concurrently, 'China Week' in Congress has led to various proposals that still require Senate approval. In tariff-related developments, China has lifted tariffs on certain agricultural imports from Taiwan, signaling a potential easing of trade tensions. Premier Li Qiang's recent meeting with the State Council focused on strategies to enhance venture capital investment, reflecting a proactive approach to stimulate economic growth. The top-performing sectors included Real Estate, Consumer Staples, and Consumer Discretionary, while Health Care, Energy, and Financials lagged behind. Overall, the market's positive response to the US Fed's rate cut suggests a growing confidence among investors, with increased trading volumes indicating heightened market activity.