Market Update 19/02/2025

Today, economic data performance varied across regions, but overall market reaction remained relatively calm. The foreign exchange market saw some volatility, yet most currency pairs stayed within narrow trading ranges. Stock market performance was mixed, while bond yields generally rose. Central bank policy stances and economic data continued to influence market sentiment, but did not trigger significant market turbulence.

U.S. Markets:
Wall Street experienced a quiet trading day. In the final hours of the North American session, the Nasdaq index fell 0.3%, the Dow Jones dropped 0.2%, and the S&P 500 remained unchanged. The U.S. 10-year Treasury yield rose 6 basis points to 4.54%.

U.S. Economic Data:
The New York Empire State Manufacturing Index for February came in at 5.7, better than the expected -2.0 and a significant improvement from last month’s -112.6. The National Association of Home Builders (NAHB) Housing Market Index declined to 42, below the expected 46 and last month’s 47.

Asian Stock Markets:
Asian stock markets closed with mixed results. The Hang Seng Index rose 1.6%, the Nikkei gained 0.2%, while Australia’s ASX 200 fell 0.6%.

European Stock Markets:
European stock markets opened flat, with the Euro Stoxx 50 down 0.1%, the FTSE 100 unchanged, and Germany’s DAX down 0.1%. Major European markets generally closed with slight gains, but the FTSE index finished marginally lower.

Foreign Exchange Market:
The dollar strengthened initially during the Asian trading session but retreated as European markets opened. AUD/USD fluctuated between 0.6333 and 0.6367, eventually stabilizing at 0.6345/50 before the Asian open. As the London session began, AUD/USD was near 0.6358. EUR/USD touched a new low of 1.0435. GBP/USD rebounded from a low of 1.2593 to near 1.2625 before falling back to 1.2583. USD/CAD hit a new low of 1.4180 before bouncing back to a high of 1.4213.

Commodities Market:
Oil prices rose 0.9% to $75.90 per barrel.

Reserve Bank of Australia Decision:
The Reserve Bank of Australia (RBA) cut its benchmark interest rate to 4.1% as expected. However, the statement and subsequent press conference were relatively hawkish. RBA Governor Michelle Bullock hinted that further rate cuts in this cycle are far from certain and stated that she views current market expectations for additional cuts as more confident in disinflation than she currently is.

UK Economic Data:
The UK employment report for December was stronger than expected, with the unemployment rate at 4.4% (expected 4.5%) and the three-month employment change to December at +107,000 (expected +48,000). Bank of England Governor Bailey commented on the employment data, noting that the UK faces a weak growth environment. Overall, he emphasized that disinflation continues.