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. This decision positively influenced both Hong Kong and Mainland China markets, with Hong Kong showing stronger performance, particularly in the internet and real estate sectors. The overall market sentiment was buoyed by the expectation that the US rate cut would lead to further stimulus measures in China, as the country has been contemplating its own cuts to support economic growth. Central Huijin and other state-backed investors have amassed a record-high of over RMB 3 trillion in A Shares, indicating a robust commitment to stabilizing the equity market. This trend mirrors Japan's approach to market support, suggesting a strategic shift in China's investment landscape. The rise in home appliance stocks, particularly following Midea's successful IPO, further exemplifies the positive market dynamics at play. In the context of trade, the White House has proposed changes to the 'de minimis' rule, which could impact tariff regulations on low-weight shipments. However, such changes may face resistance from industry groups. Concurrently, China has lifted tariffs on specific agricultural imports from Taiwan, signaling a potential easing of trade tensions. The recent 'China Week' in Congress has led to various proposals aimed at enhancing venture capital investment, reflecting a proactive approach to economic stimulation. Despite some sectors like Health Care showing declines, the overall market performance indicates a resilient recovery, driven by strategic government interventions and positive investor sentiment.