Federal Reserve (Fed) doves and risk-taking investors didn't necessarily welcome Jerome Powell's cautious tone in his speech yesterday, as the Fed Chair avoided committing to a rate cut at next month's meeting. He repeated that the risks to the labour market are tilted to the downside, while inflation risks remain to the upside – a mixed picture that requires careful policy adjustment.
US equities broke one more record before the widely awaited Federal Reserve (Fed) decision, while the Stoxx 600 fell more than 1% as rate-sensitive sectors including banks and insurers led the index lower.
Oil prices settled lower on Friday, and remain under pressure in early morning trading today, despite France and Germany pushing for secondary sanctions on Russian energy buyers
This week could have started calmly, with investors digesting Friday's policy shift at the Federal Reserve (Fed), consolidating recent gains and repositioning ahead of the all-important Nvidia earnings due Wednesday. But instead, Donald Trump chose to keep markets on edge by announcing the dismissal of Fed Governor Lisa Cook over alleged mortgage fraud.
Investors lapped up Jerome Powell's words like honey on Friday, as the man has apparently been troubled enough by the latest weakness in jobs numbers to say that this situation "suggests that downside risks to employment are rising" and that "if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment." And no one wants that to happen – especially after heavy criticism from the White House pointing at Powell as Mr. Too Late.
All eyes were on Washington yesterday, where Zelensky finally hit it off with the US President, raising hopes that peace could be on the horizon. The next step is to bring Putin to the negotiating table and find a durable solution. Peace has rarely felt so close.
Japan's Nikkei index hit a new milestone on Wednesday, crossing the 43,000 mark for the first time ever. The broader Topix index also reached a record high, following strong gains in Wall Street overnight and marking six straight days of growth.
Wall Street ended sharply lower, dragged down by losses in Nvidia and Tesla as investors awaited information about long-promised U.S. tariffs on automotive imports. Shares of Tesla fell 5.58% and General Motors ended 3.14% lower. "Markets hate the tariff uncertainty, especially when it pertains to autos. Autos are ground zero for the negative economic impacts of tariffs," said Jamie Cox, managing partner at Harris Financial Group.
Financial markets reacted negatively to President Trump’s announcement of 25% tariffs on automobile imports, effective from 2 April. US and European equities sold off.
St Louis Fed President Musalem warned that inflationary impact from tariffs might be longer- lasting, prompting Fed to keep interest rates higher.
Treasury and Australian yields were higher, but Gilt yields in the UK fell as the UK government confirmed plans for public spending cuts.
The US dollar has advanced by about 0.4% from the lows late in US trading yesterday after tariff escalation fears receded somewhat after President Trump reversed his earlier announcement to double Canada’s steel and aluminium tariff from 25% to 50%.
Concerns over the US growth outlook were amplified by Friday’s weak consumer spending data. Nevertheless, a recovery in tech stocks led US equity prices higher. Government bond yields were lower, as market pricing for the fed funds rate switched to price in more interest rates cuts this year.
The Commodities Feed: European gas sell-off continues. Oil prices are largely under pressure amid demand concerns, while the European gas market continues to sell off aggressively.
