Spreadex Market Update
Global Markets React to China Growth Concerns
Global financial markets experienced a downward slide today, driven by mounting concerns over China's economic growth and a fresh round of stimulus measures from the Chinese government. Key factors impacting the markets include cautious risk-taking during the US holiday, the outcome of the bilateral meeting between the US and China, and the Reserve Bank of Australia's (RBA) unexpectedly dovish tone in their latest minutes.
The Big News
China LPR Cut Disappoints, GS Cut Growth Forecast In an effort to support the property market, the PBOC reduced the Loan Prime Rate by 10bps. However, the market had hoped for a more substantial cut, leading to a decline in Chinese developers' stocks. Consequently, equity markets faltered, and concerns regarding economic growth resurfaced. Notably, Goldman Sachs revised down its growth rate forecast for China this year to 5.4% from the previous estimate of 6.0%. The decline in gold prices was observed, with the precious metal reaching $1950/oz and finding support at $1,939/oz, while resistance persisted at the $1,970/oz range.
US Secretary of State Meets with China's President The bilateral meeting between US Secretary of State Antony Blinken and China President Xi Jinping was viewed positively by both sides. However, no concrete measures were announced. China's Foreign Minister Qin Gang is expected to visit the US in the future. During this period, the dollar index rose by 0.2%, closing at 102.49 and moving away from the 102.10 support level, while the next resistance level stands at 102.95.
RBA Minutes More Dovish than Expected The RBA's release of the minutes from its recent meeting, where an unexpected rate hike occurred, took a more dovish tone than the market had anticipated. The central bank highlighted the delicate balance between arguments for a pause and a rate hike, expressing concerns about low productivity and increasing wages. As a result, the AUDUSD pair depreciated by 0.4%, with support found in the 0.6726 range and resistance observed at 0.6873.
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