Facing mounting economic pressure from its protracted trade war with the United States, China has unveiled a significant package of stimulus measures aimed at shoring up its domestic economy.

This flurry of policy action comes just as Beijing and Washington confirmed plans for high-level trade talks later this week, offering a tentative sign of potential de-escalation.

Top Chinese financial officials, including the governor of the People’s Bank of China (PBOC), detailed a series of steps designed to inject liquidity and support growth.

Key among these are cuts to interest rates and a reduction in the reserve requirement ratio for banks, a move intended to free up substantial funds for lending.

Specifically, PBOC Governor Pan Gongsheng announced a reduction in the reverse repo rate (the rate on commercial banks’ central bank deposits) to 1.4% from 1.5%, and a 0.25 percentage point cut in the PBOC’s lending rate to commercial banks, bringing it to 1.5%.

Crucially, the required reserve ratio for banks was lowered by 0.5%.

Governor Pan estimated this measure alone would “free up 1 trillion yuan ($137.6 billion) in extra cash” for the banking system to deploy.

Additionally, the central bank reduced interest rates on five-year housing loans, aiming to support the beleaguered property sector.

Beyond these monetary policy adjustments, the government also pledged to increase funding available for factory upgrades, technological innovation, and service sector businesses like elder care.

Navigating trade war headwinds

These domestic support measures are a clear response to the significant economic toll exacted by the high tariffs imposed by US President Donald Trump.

China’s export-reliant economy, already grappling with a prolonged downturn in its crucial property market, has been further strained by these trade barriers.

The announcement of these economic boosters coincided with news that high-level trade talks are set to resume.

Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are scheduled to meet with Chinese Vice Premier He Lifeng in Geneva, Switzerland, later this week.

This will be the first confirmed dialogue since the latest round of significant tariff escalations.

Cautious optimism greets dialogue

While the agreement to talk offers a glimmer of hope, both sides have maintained firm public stances on their respective tariff positions, leading to cautious market reactions.

“The talks ‘could be the pivot point that either locks in fragile confidence or re-ignites the ‘trade war’ inferno,’” warned Stephen Innes of SPI Asset Management in a report, highlighting the high stakes involved.

Recent economic data underscores the strain on both economies.

The US economy contracted by 0.3% in the first quarter of 2025.

While China reported 5.4% annual growth in Q1, driven by factories ramping up production to meet a pre-tariff spike in orders, economists have questioned the sustainability of this momentum, and more recent indicators show deteriorating new export orders and business sentiment.

Financial markets, which have been reeling from the standoff characterized by US tariffs as high as 145% on Chinese goods and Chinese retaliatory hikes up to 125%, reacted positively but with restraint to the dual news of stimulus and talks.

Share prices in Hong Kong rose over 2%, and Shanghai gained 0.5% in early Wednesday trading, with US futures also advancing.

However, market watchers anticipate a protracted resolution process. “We do not expect reaction to be euphoric,” commented Tan Jing Yi of Mizuho Bank, as quoted by Reuters.

Point being, any trade resolution would likely take a long time and in the near term, there may be some piecemeal exemptions or tariff reductions on certain goods.

The combination of domestic stimulus and renewed dialogue signals Beijing’s attempt to navigate the challenging economic landscape created by the ongoing trade conflict.

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PayPal stock price has bounced back this month as American equities rebound, following its first-quarter financial results. The PYPL share price rose to $68 on Tuesday, its highest level since March 27, and up by 21% above its lowest level this year. This article explores whether it is safe to buy or sell PayPal shares.

PayPal earnings download 

The PayPal stock price has done well, helped by the company’s financial results. Numbers revealed that its revenue rose by 1% to $7.8 billion, higher than the median estimate of $7.4 billion. 

This growth happened after the total payment volume rose by 3% in the quarter to $417 billion. The transaction margin rose to $3.71 billion as the company’s profits continued growing.

PayPal also had more users during the quarter as its active accounts and monthly active accounts rose by 2% to 436 million and 224 million, respectively. However, the number of payment transactions dropped by 7% during the quarter to 6 billion as its Braintree business slowed.

These numbers reflected the fact that PayPal is no longer the growth engine it was a few years ago. Also, they showed that some of the initiatives the company has made in the past few years are not supercharging its growth.

A good example of this is its PayPal USD (PYUSD) stablecoin, which aims to be a leading player in the payments industry. PYUSD’s market cap stands at $873 million, making it the tenth-biggest stablecoin in crypto. It crossed the key milestone at $1 billion briefly last year and then lost market share as competition intensified.

PayPal also introduced Fastlane, a solution that helps to streamline online purchases. Fastlane has partnered with companies like Salesforce, Adyen, BigCommerce, and Global Payments Inc. It has not helped the company to gain market share in the payment industry.

Read more: PayPal stock price forecast: why PYPL is crashing, and what next

Growth and valuation

Analysts don’t see PayPal having any substantial growth in the future. The average estimate is that its revenue will be $8.08 billion in the second quarter, a 2.5% increase from what it made a year earlier. The most optimistic analyst sees its revenue rising to $8.22 billion.

The company’s annual revenue is expected to be $32.69 billion in 2025 and $34.74 billion next year. These numbers will represent a growth rate of 2.8% and 6.28%, respectively.

These growth expectations have made it an undervalued company as its price-to-earnings multiple stands at 15, lower than the S&P 500 Index average of 20. The forward P/E ratio is 13, much lower than the five-year average of 29.

This valuation explains why analysts expect that the PayPal share price will rise to $82.32, up from the current $68. 

PayPal is doing some measures to boost its stock price, including its share repurchases that have reduced the outstanding shares to 979 million, down from the 2022 high of 1.14 billion. 

PayPal stock price analysis

The daily chart shows that the PYPL share price has bounced back from the April low of $55 to $67 today. This recovery mirrored the performance of the broader stock market.

The decline is also part of the formation of the handle section of the cup and handle pattern. It also moved below the 100-day Exponential Moving Average (EMA).

Therefore, the stock will likely remain under pressure as it remains below the key point at $70.59, the highest swing in April 2024. This price is also notable because it also coincided with the 100-day EMA. 

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European stock markets are poised for a mixed and cautious opening on Wednesday as investors globally turn their full attention to the US Federal Reserve’s impending monetary policy announcement.

Alongside the Fed decision, a heavy slate of corporate earnings reports from major European companies will provide further direction for regional markets.

Early indicators suggest a divergent start across the continent.

According to data from IG, the UK’s FTSE 100 is expected to open slightly lower by 6 points at 8,591.

In contrast, Germany’s DAX is projected to gain 40 points to 23,276, France’s CAC 40 is seen rising 5 points to 7,696, and Italy’s FTSE MIB is anticipated to add 26 points to 38,018.

The primary focus for global investors today is the conclusion of the Federal Reserve’s policy meeting, with the interest rate decision scheduled for 2 p.m. ET.

Market expectations, reflected in Fed funds futures trading (CME FedWatch tool), indicate a very low probability (around 3.1%) of an actual interest rate cut at this particular meeting.

However, investors will be dissecting Fed Chair Jerome Powell’s subsequent comments and press conference with keen interest, seeking any nuanced signals about the future path of interest rates and the central bank’s assessment of the US economy amidst ongoing trade policy uncertainties.

Domestically, European markets face another packed day of corporate earnings.

Key reports are due from a wide array of prominent companies, including pharmaceutical giant Novo Nordisk, energy firm Ørsted, jewelry maker Pandora, utility group Veolia, electrical equipment specialist Legrand, automaker BMW, healthcare technology firm Siemens Healthineers, healthcare company Fresenius, construction group Skanska B, pub operator JD Wetherspoon, real estate company Vonovia, retailer Delhaize, and Telecom Italia.

These results will offer crucial insights into corporate health across various sectors. Additionally, regional economic data releases include the latest figures on European retail sales.

Global cues: trade hopes and China stimulus

Overnight, US stock futures saw some support after government spokespeople confirmed that US Treasury Secretary Scott Bessent and top trade official Jamieson Greer would meet with their Chinese counterparts in Switzerland this week.

This news was interpreted as a positive step towards potential de-escalation in trade negotiations following President Donald Trump’s tariff announcements last month, which had sparked market volatility.

Meanwhile, Asian markets, particularly Hong Kong (up over 2%), rallied strongly after China’s central bank and financial regulators announced sweeping plans to cut key interest rates in an effort to bolster economic growth in the face of trade-related headwinds.

Early focus: Novo Nordisk beats Q1 profit, trims full-year guidance

Among the early European earnings reporters, Danish pharmaceutical major Novo Nordisk announced a better-than-expected rise in first-quarter net profit.

The company posted net profit of 29.03 billion Danish kroner ($4.4 billion) for the first three months of the year, surpassing the 27.8 billion Danish kroner forecast by analysts in an LSEG poll.

However, Novo Nordisk simultaneously lowered its full-year sales growth forecast.

This revision was attributed to weaker-than-anticipated demand for its blockbuster Wegovy weight-loss drugs, partly due to increased competition from copycat compounders.

Sales of Wegovy rose 83% annually (at constant exchange rates) to 17.36 billion Danish kroner, slightly below analyst expectations of 18.51 billion (Factset poll).

The mixed results from such a heavily weighted stock will be closely watched as European trading gets underway.

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India’s equity markets experienced a volatile but ultimately resilient session on Wednesday following the announcement of significant military action against Pakistan.

While benchmark indices opened sharply lower in immediate reaction to news of India’s retaliatory strikes, known as ‘Operation Sindoor’, they quickly pared losses, suggesting investors, while watchful, were not panicking about the escalation.

The trading day began under the shadow of heightened geopolitical tensions.

India confirmed early Wednesday that its Armed Forces had launched precision missile strikes targeting nine terrorist sites located in Pakistan and Pakistan-occupied Kashmir (PoK).

This action, codenamed ‘Operation Sindoor’, was explicitly positioned by India as a “precise and restrained response” to the recent deadly terror attack in Pahalgam, designed to be “non-escalatory” and focused solely on “known terror camps” while avoiding civilian or Pakistani military targets – a characterization disputed by Pakistan.

The immediate market reaction was negative, with the Sensex opening 692 points lower at 79,948.80. However, this initial dip proved short-lived.

The index quickly erased these losses and even pushed into positive territory, rising over 200 points to touch 80,845 before settling back into a more volatile, range-bound pattern.

Around 10 AM, the Sensex was down just 32 points (0.04%) at 80,609, while the Nifty 50 was hovering near the flatline, down 19 points (0.08%) at 24,361.

The BSE Midcap index was flat, while the Smallcap index remained down 0.33%, indicating slightly more pressure on smaller stocks.

Expert analysis: measured strike limits market panic

Market experts attributed the relatively contained market reaction, despite the significant military action, to the perceived nature of the strikes.

The focus on terrorist infrastructure, rather than broader military or economic targets, was seen as a key factor in preventing widespread panic.

“What stands out in ‘Operation Sindoor’ from the market perspective is its focused and non-escalatory nature,” VK Vijayakumar, Chief Investment Strategist at Geojit Investments, told Live Mint.

We have to wait and watch how the enemy reacts to these precision strikes by India. The market is unlikely to be impacted by the retaliatory strike by India since that was known and discounted by the market.

The clear messaging that India sought retaliation against terror camps, not broader escalation, appeared to reassure investors.

However, experts acknowledge the potential for further developments.

“There could be some reaction from Pakistan, as it may feel the need to save face,” Vijayakumar added, though he also noted, “Pakistan does not have the economic muscle to sustain a prolonged conflict.”

Historical context: market resilience during past conflicts

History offers some perspective on the Indian market’s behavior during periods of conflict with Pakistan.

Generally, the market has shown remarkable resilience, often supported by the underlying strength of the domestic economy.

During the 1999 Kargil War (May 3 – July 26), the market experienced only a minor decline of 0.8%.

Even during the two days of the Mumbai 26/11 terror attacks in 2008, the Sensex actually climbed roughly 400 points.

While the market did react negatively after the 2019 Pulwama attack (indices dropped over 1.8% between Feb 14 – Mar 1), subsequent actions like the Balakot airstrikes saw varied responses.

“Market responses may be muted during times of Indo-Pak conflict,” Vijayakumar explained.

The domestic market has never panicked during such episodes, as India holds a clear advantage in a conventional war.

Trivesh D, COO of Tradejini, echoed this, pointing out the Sensex surged 37% during the Kargil War period and saw only minor dips post-Pulwama before resuming its uptrend.

“History indicates that corrections are typically mild and quickly rebound,” Rajesh Sinha, Senior Research Analyst at Bonanza Group, told Live Mint.

Investment strategy: focus on quality, avoid panic

Given the current situation, market experts advise investors against panic selling and recommend focusing on quality, particularly in the large-cap space, which tends to offer more stability during volatile periods.

“Even as small-cap and mid-cap segments could lag as a few investors turn defensive amid border tensions, the situation offers a compelling opportunity to be overweight in quality large-cap stocks,” suggested Sinha.

A diversified portfolio approach is recommended. Sinha highlighted sectors like leading banks (with strong capital), FMCG (due to inelastic demand), and potentially defence contractors (on hopes of increased budgets) as areas that might show relative strength.

Trivesh D also suggested keeping an eye on defence and infrastructure, while noting the defensive nature of Pharma and FMCG.

He cautioned against “knee-jerk buying based on fear or news flow,” urging investors to “stay aligned with the broader trend and use any dips to enter quality names.”

Vijayakumar noted that valuations remain elevated (Nifty > 20x FY26 earnings), suggesting “no deep value in any sector.”

However, he still sees bright prospects for financials and potential in telecom, while viewing the defence sector as having received a sentimental boost but lacking deep value currently.

The key takeaway is to remain invested but exercise caution, focusing on fundamentally sound companies.

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The Rolls-Royce share price continues to power ahead, and is nearing the all-time high of 811p. It has jumped to 777p, up from the April 7 low when Donald Trump unveiled his reciprocal tariffs. This article explores a potential catalyst for the stock, and whether it will jump to 1,000p.

Rolls-Royce Holdings could see China orders

The civil aviation industry has largely been dominated by Boeing and Airbus, which makes the most popular planes.

China is aiming to become a major player in the industry by launching the C919s plane by Comac, a state-backed company.

The jet has already started flying in China, and the company hopes to manufacture 30 more this year. 

At the same time, as China and US trade talks start, there is a likelihood that the civil aviation will be a point of discussion. For China to narrow its trade surplus with the US, it will need to place a large order from Boeing, the biggest US exporter.

The risk, however, is that the trade talks may not produce the desired results, leading to an escalation. In all this, Comac may be suffer collateral damage since the company relies on many US parts, some that don’t have an alternative. 

For example, Comac’s plane uses an engine made by CFM International, a joint venture between General Electric and Safran.

Read more: Will the surging Rolls-Royce share price 1,000p in 2025?

If the US and China trade war escalates, there is a risk that Donald Trump may ban sale of this engine and other parts to Comac. It has already done that in the past by banning the sale of semiconductors to companies in the tech industry. 

Such a move would benefit Rolls-Royce Holdings since it is the second-biggest jet engine manufacturer.

The challenge, however, is that the company does not have a narrow-body engine since it exited the industry in 2011. It is now actively exploring re-entry into the market with its UltraFan engine, which may come online in the 2030s or earlier.  

Even without China, re-entry in the narrow-body engine will be a bullish catalyst for the company because of the rising demand.

The other challenge is that, for now, Comac cannot be a sustainable company without American parts. It has at least 48 suppliers from the United States, including companies like Collin Aerospace, Parker, Honeywell, and Arconic.

Rolls Royce business is doing well

The Rolls-Royce share price is also rising as the market reacts to the recent trading statement. In a brief report, the management reaffirmed its forward guidance and maintained that it will do well even with Donald Trump’s tariffs. 

The company anticipates that its underlying profit and free cash flow will be between £2.7 billion and £2.9 billion. Its large engine flying hours rose to 10% of 2019 levels, while its defence and power business is seeing strong demand.

Rolls-Royce share price technical analysis

The daily chart shows that the RR stock price has been in a strong bullish trend after bottoming at 557p in April. It is now nearing the important resistance level at 811p, the highest level this year.

Moving above that level will point to more gains this year as it will invalidate the double-top pattern that has been forming and whose neckline is at 557p. A double-top is one of the most bearish patterns in the market. 

Moving above that resistance will point to more gains, with the initial target being 850p. A move above that level will lead to more gains, potentially to the next psychological barrier at 1,000p. Such a move would push its market cap to £83 billion or $106 billion. 

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