πŸ“‰ Market Report.

🏦 The U.S. Federal Reserve held interest rates steady on Wednesday, with Fed Chair Jerome Powell saying there would be no rush to cut them again until inflation and jobs data made it appropriate. Powell said the Fed’s policy stance is “very well-calibrated” as the unemployment rate has been stable and recent inflation readings have been more positive. The Fed’s policy statement said inflation “remains elevated” but that economic activity has continued to expand at a solid pace with a stable unemployment rate. Short-term interest rate futures indicate investors expect the Fed to hold off on cutting rates again until June. Trump did not directly call for rate cuts as he had previously promised, but attributed high inflation to the Fed focusing too much on issues like diversity and climate change.

πŸ“ˆ We explained this months ago, but it is important to remember it once again. The Federal Reserve anticipates that Trump’s tariff and immigration policies will have an inflationary effect. First, because of the price increases generated by tariffs on goods within the United States. Second, because the presence of a high proportion of migrant population was helping to contain wages; as this population shrinks, labour costs tend to rise.

πŸ‡ͺπŸ‡Ί The European Central Bank is expected to lower interest rates by 0.25 percentage points to 2.75% at its meeting on Thursday, the fifth consecutive rate cut. The rate cut is aimed at boosting the sluggish euro zone economy, with analysts predicting another cut in March despite diverging views among ECB policymakers. There are signs of growing tensions within the ECB Governing Council, with doves like Yannis Stournaras and Francois Villeroy de Galhau pushing for deeper cuts, while hawks like Klaas Knot are more cautious. The euro zone economy is expected to have seen little to no growth in the fourth quarter, with risks to the ECB’s 1.1% growth forecast for 2025 skewed to the downside. Services prices remain a concern and there are risks of overshooting the 2% inflation target in the medium term.

🌍 Yesterday, Sweden’s Riksbank and the Bank of Canada both cut rates, though the Riksbank signaled its easing cycle may be over and the Bank of Canada cast uncertainty over further cuts.

β›½ Oil prices remain stable amid potential tariffs by Trump on Mexico and Canada, the two largest crude oil suppliers to the US. The White House has confirmed Trump’s intention to impose tariffs, but they can avoid them by stopping fentanyl flow. U.S. crude oil stockpiles rose by 3.46 million barrels last week, roughly in line with analysts’ estimates. Russia’s crude oil exports are expected to fall by 8% in February due to US sanctions. The OPEC+ group is set to discuss Trump’s efforts to raise US oil production. Brent crude futures are down slightly.

πŸ“Š Market View:

πŸ“‰ The recovery in US equity markets lost momentum on Wednesday, with Wall Street despondent after Powell’s remarks. Mini S&P 500 futures remain around 6,085 points, while Nasdaq 100 futures failed to break above 21,700 points and currently trade at 21,635 points.

πŸ’΅ The dollar index stabilised near 108 points, having reached a high of 108.25 points the previous day. The EUR/USD continues to weaken gradually and is trading around 1.0415, trying to hold above the key 1.04 level, which it momentarily lost yesterday.

πŸ“ˆ In Europe, markets move with uncertainty. DAX 40 futures are dangerously close to 21,800 points, showing an alarming verticality.

πŸ›’οΈ The crude oil market is down significantly: Brent crude oil is down to $76 per barrel, currently trading at $75.45. In the news section, key data has been shared on US crude stockpiles.

πŸ₯‡ On the other hand, gold futures soar above 2,800 dollars, reaching levels close to all-time highs.

πŸ’° Finally, Bitcoin regains ground and returns to the $105,000 level.

🌐 Geopolitics:

πŸ‡©πŸ‡ͺ Germany’s conservative CDU/CSU bloc managed to pass a proposal in parliament to restrict migration, backed by votes from the far-right AfD party, prompting criticism from Chancellor Olaf Scholz and his centre-left coalition, who warned of the negative impact on democracy and the risk of a future alliance between the two blocs. While conservative leader Friedrich Merz defended the decision despite his discomfort at relying on the AfD, the latter accused the traditional parties of marginalising their voters through β€˜undemocratic’ pacts.

πŸ” Censorship and control of opinion in a Europe in political decline: France, Germany, and 10 other European Union countries have signed a letter urging the European Commission to use its powers under the Digital Services Act to protect European elections from foreign interference. The letter aims to create a dedicated EU body to counter foreign information manipulation and interference. The letter cites threats of foreign interference and disruptive interventions in public debates during key electoral events as a direct challenge to EU stability and sovereignty. The letter also calls for the Commission to fully leverage the powers granted under the Digital Services Act, which requires large internet platforms to moderate and remove harmful content.

πŸ‡ͺπŸ‡Ί In a secret meeting last week, the commission pushed member states to stay together, with some comparing the situation to the Brexit negotiations, according to reports. Many European nations are experiencing political stagnation and economic anxiety.

πŸ’Ά Euroclear, the Belgian clearinghouse holding €180 billion in frozen Russian central bank assets, has argued that it should not be held liable if the EU confiscates these assets to aid Ukraine. The EU has already used profits from these assets for Ukraine’s €50 billion loan package, but discussions about tapping the principal assets could resurface due to concerns about U.S. aid continuity under a potential Trump administration. Euroclear’s CEO, ValΓ©rie Urbain, warned of risks to the euro’s reserve currency status and global financial stability, including damage to trust in the rules-based system and potential rise of non-European competitors.

πŸ‡ΈπŸ‡Ύ Syria’s new authorities, led by Ahmed al-Sharaa, have demanded Assad’s extradition from Russia, citing compensation, reconstruction aid, and acknowledgment of past mistakes. The demand was made during a meeting with Russian Deputy Foreign Minister Bogdanov. Paradoxically, Russia’s military board in Syria denounced years ago that the US-led coalition was destroying Syria’s infrastructure instead of attacking ISIS. Trump said in 2016 that Obama was funding ISIS.

πŸ‡ΊπŸ‡Έ According to Israeli media reports, U.S. President Donald Trump intends to withdraw thousands of American troops from Syria. The withdrawal of U.S. forces from Syria is expected to raise significant concerns in Israel, as it could impact the regional balance of power. In December, Israel expanded its occupation of the Golan Heights, Syria, by seizing the demilitarized zone in Mount Hermon, a move that has drawn international condemnation. Israel also declared the collapse of the 1974 Disengagement of Forces Agreement with Syria, deploying its military in the demilitarized zone, further violating Syrian sovereignty.

πŸ› During the previous term, Trump twice attempted to withdraw troops from Syrian territory. However, on both occasions there were β€˜mysterious chemical attacks’ that again justified their deployment in the area.