How to Position Investments Amidst China-US Meeting and Fed Rate Cut? Mutual Funds Quickly Weigh In

As the A-share market approaches the end of the month, the Fed's interest rate cut and the meeting between the Chinese and US heads of state have become the main themes driving recent market trading.

On one hand, the Federal Reserve, in a 10-2 vote, lowered the benchmark interest rate by 25 basis points to 3.75%-4.00%, marking the second consecutive meeting with a rate cut.

On the other hand, the Chinese and US heads of state held a meeting in Busan, South Korea, where they extensively discussed issues including China-US economic and trade relations and agreed to enhance cooperation in areas such as economy and trade.

After these events materialized, on October 30, the A-share market experienced a pullback in the late trading session, and the three major US stock indices opened lower. In the view of fund companies, both pieces of news were within expectations; moreover, expectations for the leaders' meeting had been overhyped beforehand, leading to some profit-taking sentiment in the market, which should only represent intraday volatility.

As the two countries have reached some consensus on economic and trade issues and the Fed has entered a rate-cutting cycle, how will this affect the equity market going forward? Fund companies have swiftly provided their interpretations. Their common conclusions are as follows:

First, looking ahead, uncertainty has decreased, and a slow bull market for A-shares is in sight.

Second, with the easing of China-US relations, the A-share market is returning to its long-term economic and industrial logic.

Third, the Fed's rate cut enhances global liquidity, and the structural opportunities in the A-share, Hong Kong stock, and Japanese markets deserve continued attention.

Fourth, there is institutional concern about the overvaluation of the US technology sector.

Fifth, the expectation of Fed rate cuts is still expected to drive up the price of gold.