20/03/2025 Daily Reports
Stocks Climb as Fed Holds Rates Steady
- The S&P 500 (+1.1%), Dow Jones (+0.9%), and Nasdaq (+1.4%) saw strong gains.
- Asian markets followed suit, with Kospi (+0.5%), ASX 200 (+1.2%), and Taiex (+1.8%) climbing higher.
Fed’s Decision: No Rate Cuts Yet, but Hints Remain
- The Federal Reserve held rates steady at 4.25%-4.50%, emphasizing the need for “greater clarity” on economic conditions.
- Chair Jerome Powell pushed back against stagflation fears, citing solid labor market conditions.
Uncertainty Over U.S. Economic Policy
- Investors remain wary of President Donald Trump’s economic strategy, particularly regarding tariffs and manufacturing policies.
- Market volatility continues as businesses assess potential impacts on growth and inflation.
Big Tech & AI Stocks in Focus
- Nvidia (+1.8%) rebounded after presenting its AI roadmap, addressing demand concerns.
- Tesla (+4.7%) gained ground, but remains down 41.6% YTD amid spending cut anxieties.
Bond Yields Drop, Oil Prices Edge Higher
- The 10-year Treasury yield fell to 4.24% after the Fed’s announcement.
- U.S. crude oil gained $0.41 to $67.32 per barrel, with Brent crude rising to $71.21.
What’s Next?
- The Fed’s stance signals caution, but markets seem to be betting on eventual rate cuts.
- While AI and tech stocks are showing resilience, U.S. economic policies will remain a major driver of sentiment in the coming months. Keep an eye on inflation data, upcoming Fed comments, and geopolitical risks!
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Markets Find Relief in Fed’s Cautious Tone, but Tariff Fears Persist
- Investors took some comfort from the Federal Reserve’s cautious stance on Wednesday, following weeks of market volatility sparked by President Donald Trump’s aggressive tariff policies. Since returning to office in January, Trump’s escalating trade actions have unsettled markets, weakened consumer and business sentiment, and raised fears of a potential recession.
- At its policy meeting, the Fed kept interest rates unchanged and acknowledged rising risks to both growth and inflation, but stopped short of projecting a lasting inflation surge or significant economic damage from the tariffs. Fed Chair Jerome Powell emphasized the high level of uncertainty and reiterated the need for patience, a message that helped boost market sentiment. The S&P 500 rose 1.1% on the day, while Treasury yields fell slightly.
- Still, risks remain high. Markets are watching closely as Trump’s sector-specific and reciprocal tariffs are set to take effect on April 2. Many investors remain cautious, with a growing preference for safe assets like Treasuries and investment-grade bonds. While the Fed’s move to slow its balance sheet runoff provided some reassurance, the broader outlook remains clouded by policy uncertainty and concerns over a possible downturn.
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Oil and Markets Under Pressure: The Impact of the Fed, Trump, and the Trade War
Brent crude fell below $71 a barrel, while US equity futures reversed gains. Fed Chair Jerome Powell cited policy uncertainty but signaled no rush to cut rates. Meanwhile, Trump urged lower borrowing costs, diverging from Fed policymakers. New projections forecast slower growth but higher inflation, boosting Treasury bets on rate cuts. Crude remains under pressure from bearish factors, including the US-China trade war and OPEC’s planned output increase. Despite volatility, UBS analyst Giovanni Staunovo maintains a moderately constructive outlook for oil prices.
