06/02/2025 Daily Reports
US Futures Slide as Trade War Tensions and Tech Earnings Weigh on Markets
- US equity futures fell as investors navigated escalating trade tensions and disappointing tech earnings.
- Nasdaq 100 futures dropped 0.7% after Alphabet and AMD plunged in premarket trading due to weaker-than-expected results, while S&P 500 futures declined 0.4%.
- Market uncertainty remains high, with Amazon set to report earnings on Thursday and the US jobs report due Friday.
- The yen strengthened, gold hit a record high on haven demand, and Treasury yields dipped.
- In Europe, the Stoxx 600 fluctuated as tech losses offset gains in healthcare.
- Banco Santander surged on record profits and a €10 billion buyback, while Renault fell on reports that Nissan might exit its Honda partnership.
- Meanwhile, US-China trade tensions intensified as the US Postal Service suspended inbound packages from China.
- Oil prices declined on fears that the trade war could slow global growth, despite new sanctions on Iran.
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"UK Interest Rates Poised for Drop: What’s Behind the Cut and What’s Next?"
UK Interest Rates Set to Drop—Is This the Start of More Cuts?
- The Bank of England (BoE) is expected to lower interest rates from 4.75% to 4.5% in its upcoming decision, marking the third rate cut since the peak of 5.25% in August 2023.
- Markets have priced in a 97% probability of a cut, with analysts predicting a split vote of either 7-2 or 8-1 in favor of the decision.
Why is the BoE cutting rates?
- December inflation data came in lower than expected.
- Economic growth has stagnated, raising concerns of a slowdown.
- Services inflation, a key indicator for the BoE, has declined from 5% to 4.4%
Risks and concerns
- Inflation remains above the central bank’s 2% target.
- Wage growth and rising labor costs could sustain price pressures.
- The UK’s economic growth forecasts for 2025 have been revised downward.
How many more rate cuts can we expect in 2025?
- Markets anticipate two to three additional cuts this year, bringing the base rate down to 4%.
- Morgan Stanley forecasts a more aggressive five rate cuts, lowering rates to 3.5% by year-end.
- Goldman Sachs expects rates to fall to 3.25% by mid-2025.
What are the Fed and ECB doing?
- The US Federal Reserve has paused rate cuts for now.
- The European Central Bank has already lowered rates four times in 2024 and is expected to continue cutting in 2025.
What’s next?
- The expected rate cut reflects the BoE’s balancing act between supporting economic growth and managing inflation risks.
- While lower interest rates can provide relief to borrowers and stimulate investment, persistent inflationary pressures remain a challenge.
- If inflation rebounds, the central bank may face limitations in further easing. Investors and businesses should remain cautious as monetary policy uncertainty continues to shape financial markets.
