What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets
Wall Street's latest stutter seems to have been cut short, as stock futures welcomed the announcement of upcoming U.S.-China trade talks and a fresh bout of monetary easing from the People's Bank of China to boot.
In today's column, I discuss what the Trump administration's use of "strategic uncertainty" means for the dollar.
Now, onto all of this morning's market news.
Today's Market Minute
* India attacked Pakistan and Pakistani Kashmir on Wednesday, and Pakistan said it shot down five Indian fighter jets in the worst fighting in more than two decades between the nuclear-armed enemies. Indian shares were lower on Wednesday morning, but had pared their early losses.
* U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step toward resolving a trade war disrupting the global economy.
* Chinese authorities announced on Wednesday a raft of stimulus measures, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic damage caused by the trade war with the United States.
* The moves in Asian FX markets in recent days have brought a regional conundrum into sharp focus: how much appreciation can Asian currencies countenance in the face of U.S. President Donald Trump's global trade war? Read the analysis from Reuters' columnist Jamie McGeever.
* Amid all the headlines around the U.S. minerals deal with Ukraine, Washington has pursued a potentially even more significant critical metals deal in the Great Lakes region of Africa. Read the analysis from Reuters' columnist Andy Home.
Trade talks at last
Global stock markets held steady for the most part on Wednesday, as oil prices rose and gold prices fell following signs of a potential de-escalation in the U.S.-China trade spat.
U.S. and Chinese officials on Tuesday said Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China's top economic official He Lifeng in Switzerland this weekend.
Investors appear to remain cautious about prospects for any breakthrough in tariff negotiations, though. The dollar was down for a fourth session and European stocks dropped.
Meanwhile, China announced various stimulus measures on Wednesday, including rate cuts, more cash for the banking system and the expansion of a channel that helps insurance money flow into stocks. But the big story remains what will happen with U.S.-China talks this weekend.
All eyes will now turn to the Federal Reserve, which will release its latest policy decision today. Its assessment of the still-uncertain trade and inflation picture will be watched closely, even though almost no one expects any move in interest rates on Wednesday.
Over in Europe, jitters eased and the euro held steady after German conservative leader Friedrich Merz was elected chancellor in a second round of voting on Tuesday, after he failed to secure a majority in the first attempt.
Geopolitical developments in Asia are jarring somewhat, as India's military strikes on neighbouring Pakistan have increased regional tensions. India's rupee fell slightly and stocks in Pakistan slumped after the heaviest fighting in decades erupted between the nuclear-armed neighbours.
Chart of the day
China's central bank announced on Wednesday that it will lower the borrowing cost of its seven-day reverse repurchase agreements, its benchmark interest rate, by 10 basis points (bps) to 1.40%, effective May 8. Other interest rates will drop in line with the key rate.
These announcements came shortly after U.S. and Chinese officials said the countries will meet in Switzerland this weekend for talks.
The Chinese economy is already feeling the pain from the triple-digit U.S. levies, with data last week showing factory activity contracting in April at the fastest pace in 16 months.
Concerns have been rising over the impact the tariffs would have on the job market and on the already-strong deflationary pressures in China as exporters lose their biggest customer.
Today's events to watch
* U.S. Federal Reserve's Federal Open Market Committee policy decision and press conference from Fed Chair Jerome Powell
* U.S. March consumer credit
* German Chancellor Friedrich Merz meets French President Emmanuel Macron in Paris
* Chinese President Xi Jinping visits Moscow
* Bank of England Deputy Governor Sarah Breeden speaks
* US corporate earnings: Walt Disney, Uber, Paycom, DoorDash, Skyworks, Atmos, Corteva, Axon, Emerson Electric, Verisk, Fortinet, Bunge, CF, Charles River, Rockwell, Bio-Techne Texas Pacific Land, Marketaxess, Cencora, Vistra, Dayforce, Trimble
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
