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 At the end of Wednesday, the Dow Jones Index (US30) decreased by 0.31%. The S&P 500 Index (US500) was down 0.47%. The Nasdaq Technology Index (US100) fell by 0.51%.The US Federal Reserve kept the federal funds rate at 4.25%-4.5% at its January 2025 meeting, in line with expectations. The Central Bank halted its rate-cutting cycle after three consecutive rate cuts in 2024 totaling a full percentage point. Chairman Powell said the Fed was in no hurry to cut interest rates and that it paused rate cuts to see further progress on inflation. Policymakers noted that recent indicators show that economic activity continues to grow at a solid pace. The unemployment rate has stabilized at low levels in recent months and labor market conditions remain stable.The Bank of Canada (BoC) cut its key interest rate by 25 bps to 3% in its January 2025 decision, as markets had expected, marking a 200 bps rate cut since the start of the June 2024 rate cut cycle. Meanwhile, the Central Bank also announced the end of quantitative tightening and will resume asset purchases in early March to shore up liquidity and boost economic activity. The Governing Council noted that CPI inflation has moved closer to the 2% mark in recent months and is expected to remain close to the target over the next two years.Mexico’s unemployment rate fell to 2.4% in December, the lowest since March and a 22-year low, exceeding estimates and signaling the strength of the labor market. This eased pressure on Banxico to maintain its dovish stance, bolstering confidence in the economy. Nevertheless, Banxico’s 2025 monetary program has softer conditions and potential rate cuts beyond 2024, and a 25bp rate cut in February remains the consensus.Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.97%, France’s CAC 40 (FR40) closed down 0.32%, Spain’s IBEX 35 (ES35) gained 1.09%, and the UK’s FTSE 100 (UK100) closed positive 0.28%. The DAX Index gained nearly 1% to hit a new record high of 21637.5 on Wednesday, continuing to rise for the second consecutive day. Investors were assessing fresh corporate results and preparing for key ECB monetary policy decisions today, where a 0.25% rate cut is expected.Sweden’s Riksbank cut its discount rate by 25 bps to 2.25% at its January 2025 meeting in line with market expectations, citing inflation near the 2% target but continued economic weakness. This is the fifth consecutive rate cut and the sixth since May, totaling 175 bps. Previous rate cuts have benefited households and businesses, although their full impact on demand remains to be seen.WTI crude oil prices fell below $73 a barrel on Wednesday as traders assessed the impact of potential US tariffs on Canada and other oil suppliers, as well as concerns about rising inventories. President Trump’s plan to impose 25% tariffs on Canada and Mexico, which would begin on February 1, added to the pressure as Canada is a major supplier of oil to the US. The threat weakened Canadian crude prices and US inventories rose by 3.463 million barrels, the first increase after nine straight weeks of declines.Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up 1.02%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, while Australia’s ASX 200 (AU200) was positive 0.57%.The Hong Kong Monetary Policy Authority (HKMA) kept the benchmark rate unchanged at 4.75% on January 30, hours after the US Federal Reserve kept borrowing costs unchanged. Monetary policy in the Asian financial center is conducted in line with the US as the local currency is pegged to the US dollar. The HKMA last cut interest rates in the city by 25 bps in December.The New Zealand dollar remains under pressure amid growing expectations that the Reserve Bank of New Zealand (RBNZ) will cut its 4.25% monetary rate by 50 bps at its February meeting. Markets also expect further rate easing to 3.0% by the end of the year. In economic news, New Zealand business confidence fell to a five-month low in January (54.4 vs. 62.3 in December).In Australia, major banks such as Westpac and NAB have brought forward their projections for the first RBA rate cut, now predicting it could come in February rather than May. Markets rate the probability of a 25 basis point cut in the money rate to 4.35% at the Central Bank’s February 18 meeting at 95%.

News feed for: 2025.01.30

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