Market Report.
📈 The Federal Reserve maintained its benchmark interest rate between 4.25% and 4.5% on Wednesday, holding the level established in December. During the post-meeting media briefing, Federal Reserve Chairman Jerome Powell addressed the impact of the administration’s “reciprocal” trade measures, noting that their magnitude exceeded initial projections. He warned that these measures could trigger a combination of increased inflation, reduced economic expansion, and higher jobless rates, conditions characteristic of stagflation.
🗣️ Following the latest Federal Open Market Committee (FOMC) gathering that ended Wednesday, Powell adopted a more direct approach compared to his March communication. He explicitly attributed potential economic challenges to the imposed tariffs.
🤔 Powell said it is “not at all clear” what the appropriate monetary policy response should be, given the high level of uncertainty around the scope, scale, and persistence of the tariff effects. The Fed is in a “holding pattern” as it waits for more clarity on how the economy will pivot, with the direction of policy depending on whether job market weakness or higher inflation emerges as the greater risk.
🇺🇸 U.S. President Donald Trump is expected to announce a trade deal between the United States and Britain on Thursday, according to a report in the New York Times. Trump posted on Truth Social that he would hold an Oval Office news conference on Thursday to discuss a “major trade deal with representatives of a big, and highly respected, country.” This would be the second major trade deal for Britain in a week, after it clinched a free trade pact with India. A UK official said Britain and the U.S. had made good progress on a trade deal that would likely include lower tariff quotas on steel and autos.
🌏 The news of a U.S.-UK trade deal comes as U.S. and Chinese officials prepare to hold talks in Switzerland, which could mark the first step in resolving the U.S.-China trade war. But Trump’s demands could force London to confront sensitive issues related to its trading ties with the EU and China.
⚖️ Today, the EU is expected to release a preliminary list of US items that might be subject to higher tariffs in the event that talks with Washington to reduce trade tensions fail. Potential remedies would impact US exports of industrial, agricultural, and aerospace goods worth around €100 billion. Negotiations between the EU and U.S. have made little progress so far, and the expectation is that most of the existing American tariffs will remain in place. The new EU counter-measure list will come on top of the €21 billion of U.S. goods already targeted by EU levies in response to Trump’s tariffs on steel and aluminum exports.
💻 The Trump administration plans to rescind and modify a Biden-era rule that aimed to further restrict the export of sophisticated artificial intelligence (AI) chips and technology. The Biden rule, issued in January, was part of a four-year effort to limit China’s access to advanced chips that could enhance its military capabilities and maintain U.S. leadership in AI. The Commerce Department spokeswoman said the Biden rule is “overly complex, overly bureaucratic, and would stymie American innovation.” The administration plans to replace it with a “much simpler rule” to “unleash American innovation and ensure American AI dominance.” The Trump administration officials are considering discarding the Biden rule’s tiered system of chip export restrictions and replacing it with a global licensing regime with government-to-government agreements.
📈 This move is seen as an effort to loosen restrictions on the export of advanced AI chips, which could benefit companies like Nvidia whose sales could rise if the rule is changed.
📉 Stock prices for Alphabet experienced a sharp 7.5% decline, while Apple saw a more modest 1.1% decrease following comments from Apple’s head of services, Eddy Cue, as reported by Bloomberg. According to the report, Cue expressed his conviction that traditional search engines like Google will ultimately be superseded by AI-powered alternatives. He indicated Apple’s plans to integrate AI search capabilities from companies including OpenAI, Perplexity, and Anthropic as future search options within the Safari web browser.
🍎 Apple is “actively looking at” revamping the Safari web browser to focus on AI-powered search engines, a major shift from its long-standing partnership with Google. Eddy Cue, Apple’s senior VP of services, believes these AI search providers will eventually replace standard search engines like Google, though he said they likely won’t be the default in Safari initially as they still need to improve. Apple has had discussions with Perplexity and is expected to add Google’s Gemini AI search product to Safari later this year. The company is also looking at options from Anthropic, DeepSeek, and Elon Musk’s xAI.
Geopolitics:
🕊️ A three-day ceasefire declared by Russia went into effect on Today’s morning, with a relative calm over Ukraine’s major cities compared to previous nights of heavy Russian drone and missile attacks. Ukraine has not committed to abide by the Kremlin-sponsored ceasefire, calling it a ruse by Putin to create the impression he wants to end the war. Zelenskyy acknowledged the numerous drone attacks targeting Russian sites, including Moscow, as the World War II commemorations approached. The U.S. has proposed the 30-day ceasefire, which Ukraine agreed to, but Russia says such a measure could only be introduced after enforcement mechanisms are put in place. Russia’s Foreign Ministry accused Ukraine of being the obstacle to a comprehensive ceasefire, saying Kyiv is unwilling to seriously discuss the terms.
🛢️ Persistently low oil prices could change the budget in Russia: Russia’s fiscal outlook is under strain as oil and gas revenues continue to decline, weakening one of Moscow’s most critical income sources amid the ongoing war with Ukraine. Officials are now weighing changes to the country’s so-called budget rule to adapt to a prolonged slump in oil prices.
🇷🇸 Serbian President Aleksandar Vucic, who arrived in Moscow despite EU threats, airspace closures, and a recent illness, stated that he is not afraid of punishment from the EU. He stated that he was chosen by the Serbian people and elected by the citizens of Serbia. Vucic expressed confidence that Serbia will remain on the European path and that he would be willing to be punished if needed.
🎖️ The arrival of these and other world leaders comes on the eve of Russia’s Victory Day celebrations, commemorating the end of World War II and its victory over Nazism. Zelensky warned that he could not guarantee the safety of the leaders attending the event. ‘We cannot be held responsible for what happens on the territory of the Russian Federation. They provide them with security, and therefore we will not give them any guarantees,’ Zelensky said.
🤝 Macron received Ahmed al-Sharaa, formerly known as Abu Mohammad al-Jolani, with head-of-state protocol yesterday. The United States had offered a reward of $10 million for his capture due to his role as a jihadist leader and his links to al-Qaeda.
🇫🇷 Macron said he would urge the EU not to renew sanctions on Syria, which al-Sharaa called an “obstacle” to recovery. However, He insisted the Syrian government must protect “all Syrians regardless of their faith,” referring to recent attacks on Alawite and Druze communities. Macron dismissed criticism that diplomacy should be limited to hosting allies, saying the interim government has taken first steps towards a more democratic future.
Market View:
📈 The positive tone continues on US stock markets ahead of further announcements today and following Powell’s comments yesterday. Mini S&P 500 futures continue to approach our target zone of 5,800 points, currently trading at 5,690 points. Nasdaq 100 futures are also advancing positively and stand at 20,150 points, close to last Friday’s highs, when they exceeded 20,250 points.
💵 The DXY dollar index is back above 100 points after Jerome Powell did not cut rates. For these reasons, the EUR/USD pair is back below 1.13 and currently stands at 1.1290.
📉 European indices, however, seem more subdued today. They remain positive but are not advancing with the same strength as last week. DAX 40 futures are at 23,355 points, very close to their all-time highs. EuroStoxx 50 futures are following the same pattern and are currently at 5,235 points.
🛢️ Volatility in crude oil continues, with Brent crude falling again from yesterday’s $63 to $61.20 at present. Trump’s plan is to keep oil prices low to avoid inflation and be able to cut interest rates in the United States.
🥇 Gold futures have fallen in recent hours, from over $3,400 to the current $3,360 per ounce.
🪙 Bitcoin, meanwhile, has made further gains, surpassing $99,000 before falling back to its current level of $98,835.
