Global Stock Markets Gain Pressure, Gold Falls
Global financial markets are in "risk-on" mode. Signals that the US and China are getting closer to a trade deal have led to gains in stocks, oil, and copper, while selling pressure has been placed on gold and US government bonds. Investors believe the threat of a full-blown trade war is easing after Washington and Beijing said they had reached a preliminary agreement on several sensitive issues.
Asian stocks rose around 0.8%, with Japanese and South Korean markets jumping nearly 2%. US stock index futures, such as the S&P 500 and Nasdaq 100, also continued to rise after closing at new records last week. US oil and copper futures also surged as markets began to anticipate stronger global demand if US-China tensions eased. The Australian dollar and New Zealand dollar—two currencies sensitive to the Chinese economy—also strengthened. Conversely, gold and US Treasuries were sold off as investors shifted from safe-haven assets to riskier assets, pushing up US bond yields.
The trigger for this optimism came from a two-day round of negotiations in Malaysia. Senior US and Chinese officials said they had "agreed in principle" on issues such as export controls, fentanyl, shipping tariffs, and even access to rare earth supplies, which are crucial for the tech industry. They also said the threat of 100% tariffs on Chinese goods has now been "practically crossed out," and hoped the two presidents—Donald Trump and Xi Jinping—would simply finalize the deal when they meet during Trump's diplomatic tour of Asia.
But this euphoria still faces a major test this week. Investors will be monitoring interest rate decisions from three major central banks: the Fed, the European Central Bank, and the Bank of Japan. The Fed is expected to cut rates by 25 basis points, while the ECB and the BOJ are likely to hold steady. Additionally, tech giants like Apple and Microsoft will release their earnings reports, which will be the next test: is this stock rally supported by fundamentals (corporate earnings and looser monetary policy) or simply euphoria due to news of a trade deal? (asd)
Source: Newsmaker.id
