Chinese Stocks Rise Amid Rate Hold and Escalating Trade Tensions

At the start of a week marked by economic and political volatility, Chinese stock indexes posted strong gains,
supported by the central bank’s decision to hold interest rates steady for the sixth consecutive time,
along with government efforts to enhance financial stability amid rising trade tensions with the United States.

In contrast, statements by U.S. President Donald Trump stirred anxiety and caution in American markets
after he questioned the independence of the Federal Reserve.
This led to a rise in long-term bond yields and added more uncertainty to the global economic outlook.

Contents

- China
- United States

China

Chinese Stocks Climb to Two-Week High Backed by Rate Hold and Market Support Measures

Chinese stock indexes closed Monday’s trading with notable gains, reaching their highest levels in two weeks.
This was driven by government efforts to promote financial stability and
the central bank’s decision to keep lending rates unchanged for the sixth time in a row,
amid escalating trade tensions with the United States.

The Shanghai Composite Index rose by 0.45% to close at 3291 points,
while the CSI 300 Index gained 0.35% to reach 3784 points—both hitting their highest levels since April 3.
The Shenzhen Composite Index outperformed, climbing 1.6% to reach 1910 points.

Meanwhile, the U.S. dollar declined against the Chinese yuan by 0.2%, reaching 7.2867 yuan as of 11:46 AM Mecca time.

This positive performance coincided with the widely expected decision by the People’s Bank of China to keep lending rates unchanged.
There are also expectations of an additional stimulus package during the second quarter of this year to mitigate the impact of the U.S.-led trade war.

Last Friday, Chinese Premier Li Qiang called for concrete steps to stabilize the stock market as part of a broader package aimed at reducing the effects of U.S. trade policies and boosting confidence in domestic markets.

United States

U.S. Bond Yields Rise After Trump’s Controversial Remarks on the Federal Reserve

U.S. bond yields rose on Monday following controversial remarks from President Donald Trump,
who hinted at the possibility of removing Federal Reserve Chair Jerome Powell.
This raised concerns over the central bank’s independence and impacted investor appetite for U.S. assets.

The yield on 10-year Treasury bonds rose by 7.2 basis points to reach 4.401%,
while the 30-year yield jumped 9 basis points to 4.897%.
In contrast, 2-year yields, which are more sensitive to monetary policy, remained steady at 3.792%.

Tensions escalated after Trump launched a renewed attack on Powell, stating in an interview:
“If we had a Fed Chair who knew what he was doing, interest rates would have already gone down.”

These comments deepened doubts about the Fed’s ability to operate free from political influence,
particularly given the current uncertainty in U.S. trade policies. As a result,
bond markets experienced volatility and investors perceived increased risk in the U.S. economic environment.

Chinese Stocks Rise Amid Rate Hold and Escalating Trade Tensions

Chinese Stocks Rise Amid Rate Hold

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