In just one week, major events have been happening in the global macro markets!

It started with the Federal Reserve making a bold 50 basis point rate cut, igniting market risk sentiment. Then China released a long-awaited policy package, boosting international market confidence and triggering optimistic sentiment towards Chinese assets.

On Tuesday, the three major financial regulatory agencies in China gathered before the holiday and announced a series of policies, including a 50 basis point reserve requirement ratio cut, a 20 basis point policy rate cut, lowering existing home loan rates, creating convenient tools for securities and insurance companies to exchange, establishing a special refinancing facility for share buybacks and holdings, and more.

On the same evening, the China Securities Regulatory Commission took action again, issuing Mergerrestructuring and market cap management-related policies. The M&A restructuring policy encourages listed companies to strengthen industrial integration, greatly simplify the M&A review process, while the market cap management guidelines require listed companies to improve the quality of listed companies as the basis, enhance operational efficiency and profitability, and drive the increase in investment value of listed companies.

With both China and USA making big moves, from AH stocks to the Renminbi, to Chinese concept stocks listed overseas, ETFs, and options, Chinese assets saw a surge in investor interest. Emerging markets were also greatly boosted. Expectations of another significant rate cut by the Federal Reserve further fueled a new historical high for gold.

Chinese assets are soaring, while gold is flying high!

On Tuesday, after China officially announced its stimulus policies, the three major A-share indices surged significantly. The Shanghai Composite rose by 4.15%, marking the largest single-day gain in over four years. The Hang Seng Index broke the 19,000 level, closing with a 4.13% gain, the biggest single-day surge in one and a half years.

Chinese concept stocks that have already surged ahead saw another big rise overnight. The Chinese concept stock index was impressive all day, closing up over 9%, marking the largest increase since 2022 and the highest in four months.$PDD Holdings (PDD.US)$and$XPeng (XPEV.US)$N/A.$NIO Inc (NIO.US)$and$Li Auto (LI.US)$ $Bilibili (BILI.US)$ Rise by 17%, $JD.com (JD.US)$ Rise by nearly 14%,$Alibaba (BABA.US)$rose nearly 8%.

$iShares China Large-Cap ETF (FXI.US)$ and $KraneShares CSI China Internet ETF (KWEB.US)$ Both also rose by about 10%, with KWEB trading at a much higher price than all major moving averages.

The Renminbi continues to strengthen. On Wednesday, according to Bloomberg market data, the offshore Renminbi rose above the 7.0 level against the US Dollar, for the first time since May last year.

In the options market, the trading volume of FXI call options soared to the highest since February. The premium of a 1-month contract betting 10% increase over a contract betting a 10% decrease surged to the highest level since 2015, having been deeply discounted in early August.

In the largest single trade of the day, an investor spent $6.75 million to buy FXI options, giving the right to buy 15 million shares at $33 each by mid-November, betting on at least another 12% increase, as reported by Bloomberg.

Optimism has also spread to the entire emerging markets. Emerging market stocks rose to their highest level in two and a half years on Tuesday, with the MSCI Emerging Markets stock index rising by 1.9% for the fourth consecutive day. The MSCI Emerging Markets currency index increased by 0.2%, with Brazil and Chilean currencies seeing the largest gains. The market expects that the growth of China's economy will support the prices of Latin American commodities exports.

iShares MSCI Emerging Markets ETF (EEM) closed at its highest level since April 2022, breaking through significant resistance levels.

However, poor overnight U.S. economic data has boosted market expectations of a significant rate cut by the Federal Reserve, causing gold to soar to record highs.

The US Conference Board released a report on Tuesday revealing an unexpected sharp decline of 6.9 points to 98.7 in US consumer confidence for September, marking the largest drop since August 2021. This was attributed to concerns about the labor market and overall economic outlook.

Christian Lawrence, Cross-Asset Strategist at Cooperatieve Rabobank, stated that this data has raised expectations of another 50 basis point rate cut by the Federal Reserve this year, which will support the demand for higher yield assets.

Overnight, COMEX December gold futures rose by 1.11% to $2682 per ounce at the close, hitting $2689.40 during the session, setting a new intraday high. Spot gold also rose nearly 1.4% to break through $2660 at the close, continuing to hit new highs, with a cumulative increase of 29% so far this year.

Editor/Somer