Fed Chairman Powell is one of the most influential figures in the global financial market. His every word and action is like a stone thrown into a calm lake, stirring up ripples. This time, he pressed the "pause button", but the global market seemed to "sneezed", and the turbulent mood quickly spread.
Previously, the market generally expected the Fed to start a rate cut cycle to inject a shot in the arm for the sluggish global economy. However, Powell unexpectedly announced a suspension of rate cuts. This "sharp turn" was like a bucket of cold water that doused the market's enthusiasm and also caused people to worry about the future economic trend.
The reason behind the postponement of the interest rate cut is the Fed's complex considerations on the current economic situation. The US economic growth has slowed down, the manufacturing PMI has continued to be sluggish, and corporate investment willingness has declined. The downward pressure on the economy cannot be ignored. In addition, the US inflation level remains high, the core CPI growth rate has exceeded expectations, and the job market has also shown a certain degree of resilience, which has put the Fed in a dilemma between inflation and employment.
Faced with the complex economic situation, the Federal Reserve has chosen to wait and see cautiously. The postponement of interest rate cuts may be to leave more room for future policy adjustments. This decision has also brought more uncertainty to the global market.
The US stock market was the first to be hit. Major stock indices such as the Dow Jones Index and the S&P 500 Index fell, and investor confidence was significantly impacted. At the same time, the US dollar index rose strongly. Global funds flowed back to the United States, and emerging markets faced greater capital outflow pressure.
Major economies such as Europe and Japan are also unable to remain immune. The exchange rates of the euro and the yen against the US dollar have fallen. The future monetary policy direction of the European Central Bank and the Bank of Japan has become more confusing. The outlook for global economic growth has been overshadowed, and market risk aversion has intensified.
So, in this global market "shock" caused by the Federal Reserve's "sudden brake", can Chinese assets remain unscathed or even "fly against the wind"?
The fundamentals of China's economy, which are strong in resilience, great in potential and with ample room for maneuver, have not changed. A series of policies to stabilize growth have also continued to take effect, providing strong support for the smooth operation of the economy.
From a domestic perspective, the Chinese government has recently introduced a series of policy measures to expand domestic demand, promote consumption, and stabilize investment. The active fiscal policy and prudent monetary policy have formed a synergy to inject strong momentum into the economy. Infrastructure investment continues to increase, new urbanization construction is steadily advancing, and the consumer market is gradually recovering. All of these have provided a solid foundation for the continued growth of China's economy.
From the external environment, although the global economic growth has slowed down, China's economic and trade cooperation with countries and regions along the "Belt and Road" has continued to deepen, opening up a broader market space for Chinese companies.
China has the world's largest manufacturing industry with the most complete industrial system, and plays a vital role in the global supply chain, which provides a strong guarantee for China's economy to resist external risks.
The Chinese economy is also facing some challenges. The real estate market adjustment has not yet ended, local government debt risks still exist, and the uncertainty of the external environment may also have a certain impact on the Chinese economy.
Compared with other major economies, China's economic growth resilience and risk resistance are stronger, and the long-term investment value of Chinese assets remains outstanding.
China's stock market valuation is at a historical low, with a high investment cost-effectiveness. With the steady recovery of China's economy and the continuous improvement of corporate profitability, China's stock market is expected to usher in the dual benefits of valuation repair and performance growth.
The scale of China's bond market continues to expand, and the yield is relatively high, which is very attractive to overseas funds. The Chinese government actively promotes the opening up of the bond market to the outside world, providing more investment opportunities for overseas investors.
After a period of adjustment, the risks in China's real estate market have been relieved to a certain extent. With the increase of policy support in the future, the real estate market is expected to stabilize and rebound, which will also provide support for China's economic growth.
In general, the Fed's suspension of interest rate cuts has a multi-faceted impact on global markets, and it is difficult for the Chinese economy and Chinese assets to remain completely out of the picture.
The fundamentals of China's economy remain stable and improving. The Chinese government is determined to maintain stable growth. The long-term investment value of Chinese assets is still worth looking forward to.
Against the backdrop of global economic uncertainty, Chinese assets may become a "safe haven" for global funds, bringing more opportunities to investors.
Investors also need to remain rational, pay close attention to changes in the global economic situation, and take good risk prevention measures in order to maintain long-term stability in the investment market.
