China’s latest stimulus measures fail to impress as investors focus on U.S. trade talks

Economic

Summary:

China’s latest stimulus measures failed to lift markets as investors remain focused on U.S. trade talks. Economic data show signs of weakening, and analysts expect limited progress in upcoming negotiations.

China’s latest push to revive growth with broader stimulus measures has failed to cheer its stock market as worries over economic deterioration outweigh policy optimism, with investors focused on trade talks with the U.S.

The scope of the stimulus package, including interest rate cuts and a major liquidity injection, drew some comparisons to a sweeping policy rollout last September that had fueled a market rally, lifting the CSI 300 index over 32% in a six-day winning streak.

However, the story did not repeat this time. The benchmark index barely budged on the day of the announcement, adding just 0.61%, and rose by nearly the same Thursday. Hong Kong’s Hang Seng Index gained less than 0.4% over the two days.

Markets had largely priced in the policies ahead of the briefing, coupled with concerns over the ongoing trade war hurting the world’s second-largest economy, according to analysts.

People’s Bank of China Governor Pan Gongsheng on Wednesday announced to cut key policy rates by 10 basis points and lower the amount of cash that banks need to hold by 50 basis points. Among a raft of measures, Pan said the central bank will set up low-cost relending facilities for repurchases of tech-related bonds and for investments in elderly care and services consumption.

The stimulus was largely in line with the economic priorities laid out at last month’s Politburo meeting. It was “nothing but a stopgap instead of a solution,” said Neo Wang, lead China economist and strategist at Evercore ISI.

The Politburo, China’s second most powerful political body, last month urged local authorities to prepare for “worst-case scenarios” with sufficient planning, calling for an accelerated implementation of proactive fiscal and monetary policies. It also laid out plans to support financing for the technology sector, boost domestic consumption while stabilizing exports.

Without specific mention of tariffs, the central government acknowledged that “impacts from external shocks” have intensified.

Unlike last September, when the PBOC explicitly backed the stock markets and provided direct financing for investments and share buybacks, this round of stimulus is more targeted at industrial and social needs, said Eugene Hsiao, head of China equity strategy at Macquarie Capital.

For a meaningful rally, investors are awaiting more targeted fiscal measures that directly boost consumer sentiment and more effective plans to prop up the real estate sector, said Hsiao.

Economic strains

Chinese policymakers, privy to the country’s early economic data, appeared to be ramping up stimulus measures at a time when the economy has started to feel the early strains from tariffs.

“China is responding to the evident slowdown in economic activity,” said Thierry Wizman, global FX & rates strategist at Macquarie.

While China’s economy expanded by a better-than-expected 5.4% in the first quarter, it now faces growing headwinds after the tariff conflict with the U.S. intensified last month. In view of the exorbitant tariffs, a slew of major Wall Street banks slashed China’s full-year growth forecasts to around 4%, significantly lower than the official growth target of around 5%.

Latest economic data out of China has signalled economic deterioration. The manufacturing purchasing managers’ index fell to a 16-month low, sliding into contractionary territory in April, with a gauge on new export orders dropping to its lowest since December 2022. Services activity in the country also slowed in April from the prior month.

China is set to release its trade data for April on Friday which is likely to reflect the full impact of tariffs on its outbound shipments.

ANZ’s Yeung estimates export growth to fall by 2.2% in April, a sharp decline compared to a robust 12.4% growth in March as exporters’ front-loading started tapering off. The number of container vessels from China to the U.S. dropped dramatically to 42 by end-April from 71 on April 21, according to his estimates.

Concerns have been mounting that the fallout would spill over to the labor market. The latest PMI indicated employment fell across the board in April, as manufacturers started to halt production and put workers on paid leave.

Goldman Sachs estimates that that 16 million jobs — 2% of the country’s labor force — are involved in the production of U.S.-bound goods.

The recent revocation of the U.S. “de minimis” rule, which exempted low-value goods from tariffs, has also raised employment worries in China’s labor intensive sectors, particularly apparel and consumer electronics.

Beijing not blinking

Beijing’s stimulus push came ahead of trade talks between the U.S. and China that have raised hopes of a de-escalation in trade tensions between the two countries.

“Any measures that could help China’s economy sustain growth in the face of the U.S. import tariffs would increase China’s bargaining power in subsequent negotiations with the U.S.,” said Macquarie’s Wizman.

China confirmed Wednesday that Vice Premier He Lifeng will meet with U.S. Treasury Secretary Scott Bessent during a visit to Switzerland later this week while claiming it was requested by Washington. Trump disagreed with that characterization.

The planned meeting would mark the first high-level U.S.-China trade talks since the tariff escalations this year.

While reaching a comprehensive deal is likely to be complex and time-consuming, a phased rollback of tariffs from both sides is possible, although analysts are split on the pace of such de-escalation.

Robin Xing, chief economist at Morgan Stanley projects U.S. effective tariffs on Chinese goods could be lowered from the current prohibitive levels to a terminal rate of 45% by year-end.

However, attempts to achieve a more comprehensive deal, similar to the Phase One deal signed during Trump’s first term, will likely be “lengthy and possibly unproductive,” said Tianchen Xu, senior economist at Economist Intelligence Unit, as both sides have shown little appetite for compromise over respective strategic priorities and economic red lines.

China failed to fulfill its commitment under the Phase One deal to purchase $200 billion more in U.S. goods and services over two years as the Covid-19 pandemic hit.

For the upcoming tariff meeting with Bessent, China “doesn’t believe this talk will lead anywhere,” said Wang Dan, China director at risk consultancy firm Eurasia Group. “Things could get worse and that’s why they are saving the big gun for later,” she said, alluding to potential stronger measures to support the Chinese economy.

source :cnbc

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Stocks

Economic

For several weeks now, investors have been confronted with a phenomenon that has become rare in recent years: the underperformance of US indices. This is the logical result of the trade war launched by Donald Trump, the most significant effects of which will be felt on the US economy.

A strength turned into a weakness

For European companies, this is a real paradigm shift. In recent years, exposure to the US market was a real advantage because the US was the strongest growth area, driven by robust consumer spending. Now, this exposure seems riskier, with the threat of recession on everyone's mind.

To measure this, the MarketScreener team selected the 20 companies with the highest exposure to the US – based on the share of revenue generated in the US – from among the 300 largest European capitalizations.

From this selection, we built an equally weighted portfolio of these 20 stocks and compared its performance to that of the Euro Stoxx 50.

The results are clear. Between the beginning of 2023 and the end of 2024, the performance of this selection of stocks is 39%, compared to 29% for the Euro Stoxx50.

And in 2025, the balance of power was reversed. The portfolio of stocks rose by only 4%, compared with an 8% gain for the Euro Stoxx 50.

The impact of exchange rates

But the US slowdown is not the only headwind. Another factor to consider for European companies is exchange rate movements. Heavy exposure to the US means a lot of revenue in dollars, which then has to be repatriated in euros. However, the euro has risen by 9% since the start of the year.

In recent weeks, when publishing their first-quarter results, several European companies have alerted investors to the adverse impact of exchange rates on their profits. This is particularly true of SAP, Porsche, Heineken and Schneider Electric.

This is prompting analysts to revise their earnings expectations downward. HSBC, for example, has reduced its EPS growth forecast for the FTSE Europe to 2.9% in 2025. This will be a drag on the continued outperformance of European equities, while, according to Factset, EPS growth for S&P 500 companies is expected to be 9.5% this year.

source : marketscreener

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Golden Gleam

Commodity

Economic

Technical Analysis

XAU/USD quotes continue to move within the development of the correction and the bullish channel. At the time of publication of the forecast, the price of Gold for today is 3340 Dollars per Troy Ounce. Moving averages indicate the presence of a short-term upward trend. Prices have broken through the area between the signal lines upwards, which indicates pressure from asset buyers and potential continuation of growth from the current levels. At the moment, we should expect an attempt to develop a bearish correction of gold and a test of the support level near the 3320 area. From where we should expect an upward rebound and continued growth in the price of Gold with a potential target above the level of 3525.

GOLD Forecast and Analysis for May 9, 2025

An additional signal in favor of the growth of XAU/USD quotes will be a test of the support line on the relative strength indicator (RSI indicator). The second signal will be a rebound from the lower border of the bullish channel. The cancellation of the Gold price increase option on May 9, 2025 will be a fall in prices and a breakout of the 3295 level. This will indicate a breakout of the support area and a continuation of the fall in asset quotes to the area below the 3245 level. It is worth expecting an acceleration of the growth of XAU/USD quotes with a breakout of the resistance area and a price close above the 3425 level.

GOLD Forecast and Analysis for May 9, 2025 suggests an attempt to develop a price decline and test the support area near the 3320 level. Further, the continuation of the growth of non-ferrous metal quotes with a target above the 3525 level. The cancellation of the Gold price increase option will be a fall in the asset value on the markets and a breakout of the 3295 level. This will indicate a continuation of the decline in Gold prices with a potential target below the 3245 mark.

Source: forex24.pro

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

Central Bank

President Donald Trump derided Federal Reserve Chairman Jerome Powell once again Thursday, a day after the central bank voted to not lower rates because of economic uncertainty created by tariffs.

Trump said in a Truth Social post:

″‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue. Other than that, I like him very much! Oil and Energy way down, almost all costs (groceries and “eggs”) down, virtually NO INFLATION, Tariff Money Pouring Into the U.S. — THE EXACT OPPOSITE OF “TOO LATE!” ENJOY!”

The Fed on Wednesday voted to keep its benchmark interest rate between 4.25% and 4.5%, where it’s kept the range in the three meetings this year since last cutting in December. This has frustrated the president, who wants the central bank to cut rates to counter a possible slowing economy due to the rollout of his trade policies.

The Fed said that it was keeping rates the same until the economic outlook becomes a bit clearer and that “the risks of higher unemployment and higher inflation have risen.” The central bank doesn’t want to slash rates if Trump’s tariffs end up sparking inflation.

Powell addressed Trump’s frequent criticisms and call to lower rates briefly in a news conference that followed the Fed’s decision, saying it would not impact the Fed’s job “at all.”

“We are always going to do the same thing, which is we are going to use our tools to foster maximum employment and price stability for the benefit of the American people,” Powell said. “We are always going to consider only the economic data, the outlook, the balance of risks and that’s it. That’s all we are going to consider.”

Trump troubled the markets last month, with investors fearing he would try to fire Powell before his term as chair ends in May 2026, a move that would threaten the independence of the Fed that many deem essential to the proper functioning of the U.S. financial markets. The comments helped fuel a market sell-off that came amid his implementation of tariffs.

But Trump in late April said he had “no intention” of firing Powell, comforting investors after he had also paused most of the highest “reciprocal” duties.

Just this past Sunday, Trump ruled out removing Powell when asked about it on NBC’s “Meet the Press.”

“No, no, no... why would I do that? I get to replace the person in another short period of time,” Trump said.

However, in the same interview he called Powell a “total stiff.” Trump initially appointed Powell during his first term as president, and former President Joe Biden reappointed Powell in 2022.

Source: cnbc

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Devin

Economic

The agreement will open up the British market to American beef, ethanol, and other agricultural products, the White House said. It will also allow British cars and steel better access to U.S. consumers.

President Donald Trump said in the Oval Office Thursday that additional details will be worked out in the "coming weeks." But in a fact sheet the administration said the deal is “historic” and “a great deal for America.”

U.K. Prime Minister Keir Starmer has said the deal would protect thousands of auto jobs and stressed the importance of the relationship between the two countries.

Here are some elements of the agreement announced by the two countries:

—The United States will maintain the 10% duty on nearly all imports from the U.K., which Trump imposed April 2. Many economists had hoped that the tariff would be dropped as part of any trade deal, but Trump suggested that the 10% universal duty was likely to be a floor in any talks.

—The U.K. will be able to export 100,000 cars to the U.S. annually that will pay a 10% tariff, down from its current 27.5%, according to the U.K. government. The UK exported 92,000 cars to the U.S. in 2024.

—U.K. steel imports will enter the U.S. duty-free, rather than face the 25% tariff the White House has placed on all steel imports.

—The two countries have agreed to greater market access for each other's beef, with the U.K. able to export 13,000 metric tons of beef to the U.S. tariff-free.

—The U.K. will eliminate its tariff on ethanol from the U.S.

—The U.K. will “reduce or eliminate” non-tariff barriers to U.S. exports, the White House said, though it did not provide details. The agreement creates opportunities for $5 billion in new exports of U.S. agricultural and other goods, according to the administration's fact sheet.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

Dollar Advances on Trump’s UK Trade Deal Signal, Fed Holds Steady

The U.S. dollar climbed on Thursday as traders reacted to President Donald Trump’s announcement of a trade agreement with the United Kingdom. The news, combined with a cautious Federal Reserve and rising Treasury yields, helped support the greenback across key currency pairs.

At 14:18 GMT, the U.S. Dollar Index (DXY) is trading 99.928, up 0.059 or +0.06%. This is up from a low of 99.609, and down from a high of 100.210.

Trump’s UK Trade Deal Sparks Dollar Buying

The U.S. Dollar Index (DXY) edged higher to 100.21, reflecting gains across most major counterparts. Trump’s declaration that a “full and comprehensive” trade deal with the UK would be announced later in the day helped reinforce positive sentiment around the greenback. The dollar rose 0.6% to 144.66 yen, extending its rally following the Federal Reserve’s decision to hold interest rates steady.

Sterling initially spiked on the deal news, rising as much as 0.5%, before pulling back to $1.3314 after the Bank of England cut rates by 25 basis points. The euro stabilized at $1.1309 after dropping 0.56% the prior session—its sharpest loss in two weeks.

Traders are weighing Trump’s broader trade push, which also includes potential deals with India, South Korea, and Japan. While optimism around the UK deal supported the dollar, market participants remain wary about the complexity of talks with Europe and especially China.

Fed Policy Stance Anchors Dollar Support

The Federal Open Market Committee maintained its federal funds rate target at 4.25%–4.5%, as expected. Chair Jerome Powell emphasized uncertainty in the economic outlook, citing risks from elevated inflation and rising unemployment. “It’s not at all clear what the appropriate response for monetary policy is at this time,” Powell said.

Despite holding rates, markets now price in three rate cuts by year-end, with the next move anticipated in the July–September window. Nonetheless, Powell’s neutral tone and acknowledgment of tariff-induced risks added a hawkish undertone, helping stabilize the dollar.

Treasury Yields Rise as Traders Assess Trade, Fed Signals

Daily US Government Bonds 10-Year Yield

U.S. Treasury yields moved higher on Thursday. The 10-year yield rose over 3 basis points to 4.304%, while the 2-year yield climbed to 3.822%. The uptick came as traders digested the implications of Trump’s trade strategy and the Fed’s policy pause.

Better-than-expected labor data also added to dollar support. Initial jobless claims fell to 228,000, below consensus expectations, signaling underlying strength in the labor market despite tightening financial conditions.

Market Forecast: DXY Supported Near-Term, Eyes on China Talks

With the Fed standing pat and U.S. trade policy showing active momentum, the dollar remains underpinned in the near term. Continued firmness in Treasury yields and strong labor data enhance support for DXY above 98.901.

Attention now turns to this weekend’s meeting between U.S. Treasury Secretary Scott Bessent and China’s economic chief He Lifeng. While a breakthrough remains unlikely, any hint of progress could temper further dollar upside. Until then, DXY strength appears stable, with 100.50 as immediate resistance.

DXY Outlook: Bullish Bias Intact but Upside Capped Ahead of Key Catalyst_2

Daily US Dollar Index (DXY)

echnically, the key level to overcome on the upside is 100.375 and the key level on the downside is 99.172.

Because of the two higher bottoms at 99.172 and 98.901, we’re leaning to the upside. Taking out 100.375 will confirm this notion with 101.302 the next objective.

Taking out 98.901 will signal the return of sellers with the downside target zone 97.921 to 97.685.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

Adam

Cryptocurrency

Ether has outperformed Bitcoin BTC +3.43% and other top altcoins within the last seven days, according to The Block’s price page. The weekly timeframe showed ETH +10.75% was up about 5.7% by Thursday, more than any other cryptocurrency in the top 10 by market capitalization.

ETH’s ascent this week followed institutional demand since April. CoinShares reported two consecutive weeks of inflows to spot Ether exchange-traded funds. Speculators also suggested the Pectra upgrade activated on May 7 might have also bolstered prices, but Nansen Research Analyst Nicolai Sondergaard said otherwise.

“Many view the Pectra upgrade in a positive light, but I do not see how it will transform Ethereum immediately,” Sondergaard told The Block. “It will be a long-term process."

Instead, the Nansen expert proposed that technical factors and sentiment drove Ether’s recent surge. “I think lots of people still see ETH as somewhat cheap, and some charts have been going around, showing that ETH is ready for a breakout.”

Analyzing smart money

Sondergaard mentioned accumulation by “smart money” as another factor. Smart money means institutional investors and other large entities with substantial capital and deep market insight. The Nansen analyst said data showed firms like Wintermute buying ETH, likely for market-making returns.

“Smart money has also been accumulating some (even if many smart money holders are also dumping). Wintermute specifically acquired a lot these past 24 hours, maybe just to take advantage of increased interest and earning good fees from market making," Sondergaard said.

Lookonchain flagged similar activity. London-based Abraxas Capital withdrew 41,269 ETH worth over $75 million from Binance and Kraken since late Wednesday, per the onchain smart money tracker.

Zooming out, ETH was still below its March lows and 59% off its all-time high of $4,878. The ETH/BTC chart also remained at a five-year low since early April, according to TradingView. Per IntoTheBlock data, 65.5 million addresses holding ETH — nearly half of all global Ethereum wallets — sat in losses or were out-of-the-money.

Market rally

Ether's price leap was part of a broad crypto rally this week after U.S.-China trade negotiations put markets back into "risk on" mode. Despite the Federal Reserve's holding pattern on funding rates, the digital asset sector increased over 3% on May 8 and recovered to $3.2 trillion. Bitcoin touched $100,000 several times on Thursday but retreated afterwards, likely due to resistance at that level.

Ryan Lee, chief analyst at Bitget Research, said BTC may require a more favorable macro environment to flip the resistance at $100,000 into support. "A clear break above this psychological barrier could hinge on consistent economic signals favoring policy easing," Lee noted.

Wincent Senior Director Paul Howard remarked that more positive news from the U.S. would push Bitcoin higher and benefit cryptocurrencies in general.

"Overall, we are seeing a net positive shift in risk assets, with Bitcoin advancing 2.7% over the past 24 hours," Howard shared in a note to The Block. "The market now anticipates a potential follow-through later this year, whether in the form of rate cuts or broader macroeconomic stimulus."