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on september 19, global assets surged.

a-shares opened low and ended high. as of press time, more than 5,000 stocks in the two markets rose.

global asset explosion

the three major a-share indices rose sharply. the chinext index rose by 1.53%, the shanghai composite index rose by 0.82%, and the shenzhen component index rose by 1.65%.

the big financial sector continued to strengthen, with securities and diversified finance leading the gains. jinlong shares hit the daily limit. previously, hongye futures had hit the daily limit for four days in seven days. xinli financial, huaxin shares, guosen securities and others were among the top gainers.

the real estate sector fluctuated higher. as of press time, tiandiyuan hit its daily limit, gemdale group rose more than 6%, and china communications construction real estate, everbright jiabao, sdic services, china merchants property, and zhongzhou holdings were among the top gainers.

asian and pacific stock markets rose collectively, with the nikkei 225 index surging 2.74%.

major global stock index futures rose. the ftse a50 futures index rose sharply. after the us stock market collectively plunged at the end of yesterday's trading, stock index futures also rose today.

in addition, many commodities futures markets saw sharp increases, and bitcoin also surged, rising more than 3% on the day.

the global interest rate cut cycle begins

a few hours after the federal reserve announced a rate cut, many places followed suit.

on september 19, beijing time, the hong kong monetary authority lowered the benchmark interest rate by 50 basis points to 5.25%.

in addition to the hong kong monetary authority, more central banks announced interest rate cuts on september 19:

the central bank of kuwait cut its interest rate by 25 basis points to 4%.

the central bank of bahrain cut its overnight deposit rate by 50 basis points to 5.50%;

the uae central bank cut its overnight deposit rate by 50 basis points to 4.90%;

the qatari central bank cut its deposit rate by 55 basis points to 5.2%, its repurchase rate by 55 basis points to 5.45%, and its lending rate by 55 basis points to 5.70%.

since the beginning of the year, several central banks have started to cut interest rates before the federal reserve:

on september 18, the indonesian central bank decided to cut the benchmark interest rate by 25 basis points to 6%. at the same time, it lowered the deposit rate to 5.25% and the loan rate to 6.75%.

on september 12, the european central bank implemented its second interest rate cut this year. the central bank's interest rate decision in september showed that the deposit mechanism rate among its three major interest rates would be reduced by 25 basis points, and the main refinancing rate and marginal lending rate would be reduced by 60 basis points. after the interest rate cut, the three major interest rates were reduced to 3.50%, 3.65% and 3.90% respectively.

on september 4, the bank of canada cut its key interest rate by 25 basis points to 4.25%, the third consecutive rate cut this year.

on august 15, the bangko sentral ng pilipinas announced a 25 basis point interest rate cut.

on august 14, the reserve bank of new zealand unexpectedly cut interest rates by 25 basis points, lowering the benchmark rate from 5.5% to 5.25%.

on july 31, the bank of england cut interest rates by 25 basis points to 5%;

on july 24, the bank of canada announced a 25 basis point cut in its benchmark interest rate to 4.5%. the bank of canada announced a 25 basis point cut in interest rates to 4.75% on june 5;

on june 6, the ecb cut all three interest rates by 25 basis points, lowering the main refinancing rate, marginal lending rate and deposit facility rate to 4.25%, 4.50% and 3.75% respectively. this is the first interest rate cut by the bank since 2019;

on may 8, the swedish central bank cut interest rates by 25 basis points, the first rate cut by the central bank in eight years.

the fed's dot plot shows that the fed will cut interest rates by a total of 100 basis points in 2024. after a 50 basis point cut in september, there is an expectation of another 50 basis point cut. the fed is expected to cut interest rates by another 100 basis points in 2025, the same as the rate cut expected in the dot plot in june.

historically, once the federal reserve starts a rate cut cycle, it will not stop lowering interest rates in the short term, but will instead take long-term and consistent policy actions.

image source: wind

latest interpretation

how will the fed's interest rate cut cycle affect the global and a-share markets? several brokerage firms released their latest interpretations this morning.

cicc: the possibility of a "soft landing" of the us economy in the short term will further increase

cicc's research report pointed out that judging from the interest rate decision, the fed adopted a larger interest rate cut of 50 basis points, which was more aggressive than expected. the monetary policy statement pointed out that recent inflation data gave policymakers more confidence in achieving the 2% inflation target. the fed's actions showed that its reaction function has completely shifted from focusing on inflation to focusing on employment.

this is a signal that the fed has a low tolerance for rising unemployment and officials do not want to take the risk of ruining the prospect of a "soft landing". based on powell's statement, we believe that any unemployment rate above 4.4% in the future may trigger more rate cuts.

this also shows that the fed will maintain a "dovish" stance until the data on the job market stabilizes. looking ahead, as the fed adopts a more substantial interest rate cut, the possibility of a "soft landing" in the short term will further increase.

huatai securities: the fed's continued interest rate cut cycle is expected to reduce the rmb exchange rate spread and open up domestic monetary policy space

huatai securities released a research report saying that overall, the federal reserve started the interest rate cut cycle with a 50bp cut, catching up with the interest rate cut pace of other major central banks; the 50bp cut did not cause market panic; it is expected that the federal reserve will continue to cut interest rates, but the "step" of 50 basis points may not be the norm.

looking ahead, the federal reserve is expected to continue to push for interest rate cuts in the future, with the cumulative rate cuts expected to reach 100-125bp this year (50-75 basis points remaining); the federal reserve's launch of a sustained rate cut cycle is expected to further alleviate the pressure of foreign exchange outflows on the rmb exchange rate caused by interest rate differentials, and open up domestic monetary policy space.

fu peng of northeast securities: open the monetary policy toolbox as soon as possible during the window period

fu peng, chief economist of northeast securities, said that the federal reserve announced a 50 basis point interest rate cut to 4.75%-5.00% in its latest statement. taking advantage of the window period, the exchange rate is stable on the rope (middle price), and the monetary policy toolbox should be opened as soon as possible.

he said that the current domestic policies can only play a role if they are sufficient to generate risk appetite. the nodes of effectiveness include both price and time. missing the time is also a kind of missed opportunity. the market will try to push the 10-year treasury yield below 2%, after all, it is already 2.04%. (people's bank of china) if we open the toolbox and grasp the time window to guide the curve to move further downward until it has a direct effect on the economy (improving risk appetite), we can also guide the cost of the existing household debt.