12/03/2025 Daily Reports
Markets Edge Higher as Trump Downplays Recession Fears, Ukraine Truce Hopes Rise
- Stocks steadied in Asia, and futures for US and European markets climbed after President Donald Trump reassured business leaders about economic growth and his plans to accelerate industrial projects.
- S&P 500 and Nasdaq 100 futures gained as Trump dismissed recession concerns, while European contracts rose 1% following Ukraine’s acceptance of a US-backed 30-day ceasefire proposal.
- However, market volatility remains elevated, with Trump’s new steel and aluminum tariffs taking effect Wednesday, fueling trade war concerns.
- The VIX index remains near its highest level since August, reflecting investor uncertainty over tariffs, Fed rate policies, and geopolitical tensions.
- Goldman Sachs cut its US stock market forecast amid slowing economic growth and weakness in the “Magnificent 7” tech stocks.
- Meanwhile, US inflation data due later Wednesday is expected to show persistent price pressures, potentially limiting the Federal Reserve’s ability to cut interest rates.
- In commodities, oil extended gains as the US reduced its global supply forecast, while gold held firm as investors sought safe-haven assets.
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Rate Cut Hopes Revived as Inflation Cools in February
- US stocks bounce back following a period of losses, as February’s inflation data comes in lower than expected, easing concerns about prolonged price pressures.
- The S&P 500 and Nasdaq 100 futures rise by 1.3% and 1.7%, respectively, with a tech-led rally driven by strong gains in Tesla and Intel.
- Federal Reserve rate cut expectations remain intact, with markets still pricing in almost three rate cuts in 2025 despite ongoing trade uncertainties.
- Hedge funds reduce risk exposure, with Goldman Sachs reporting the largest hedge fund de-grossing event in four years, indicating a more cautious stance.
- Market volatility remains elevated, with the VIX futures curve showing signs of short-term panic rather than a deep systemic crisis.
- Bitcoin and gold maintain stability, reflecting investor appetite for diversification amid macroeconomic uncertainties.
- Bond markets hold steady, with US 10-year Treasury yields unchanged at 4.29%, while Germany’s 10-year yield edges closer to 3% on expectations of higher debt issuance.
- Energy prices rebound, as WTI crude oil rises 1.5% to $67.23 per barrel, signaling a recovery in risk sentiment.
- What’s Next?: While the latest inflation data provides temporary relief, the market remains highly sensitive to economic indicators and policy developments.
