The U.S. Federal Reserve (Fed), which unsurprisingly left its rates unchanged on Wednesday, mentioned an increase in “uncertainty” and downgraded its forecasts for the world’s largest economy two months after Donald Trump returned to the White House.
At the end of a two-day meeting, the Fed’s communication shows that its officials are less confident in the health of the U.S. economy. According to their first forecast update since December, they now anticipate much weaker GDP growth, at +1.7% by the end of the year (compared to the previously expected 2.1%). They also predict an acceleration in inflation to 2.7% (up from 2.5% in December).
Profit-Taking in Europe
In Paris, the CAC 40 closed with a 0.70% gain at 8,171.47 points. The British FTSE edged up 0.02%. Germany’s DAX, weighed down by profit-taking in defense stocks, fell by 0.34%. The index had hit a record high the day before, at 23,476.01 points. The EuroStoxx 50 index gained 0.46%, the FTSEurofirst 300 added 0.28%, and the Stoxx 600 rose by 0.26%, mainly driven by the energy sector (+1.53%) amid geopolitical risks.
Defense companies Renk Group, Rheinmetall, and Hensoldt dropped by 4.53% and 9.31% due to profit-taking after the Bundestag approved a reform of the debt brake, which is expected to support the country’s military spending.
Inflation in the Eurozone stood at 2.3% year-on-year in February, slightly below the initial estimate, according to final data published by Eurostat.
The yield on 10-year German government bonds ended down about two basis points (bps), at 2.798%, after hitting a two-week low of 2.748% during the session. It had climbed to 2.938% last week, its highest level since October 2023.
Investors are focusing on the Fed and U.S. tariffs.
In Switzerland, the SMI ended down 0.16%. Heavyweights Roche (-1.0%), Nestlé (-0.8%), and Novartis (-0.2%) weighed on the index, as did UBS (-1.6%), which finished as the worst performer.
Rebound in the U.S.
The Dow Jones gained 0.92%, the Nasdaq rose by 1.41%, and the broad S&P 500 index advanced 1.08%.
Aircraft manufacturer Boeing surged (+6.84%) following comments from its CFO. Brian West assured that the company had little exposure to President Trump’s tariffs, noting that most of its supplies come from the U.S.
Tesla saw strong demand (+4.68%) after Bloomberg reported that the company had taken a key step in developing its robotaxis in California, receiving an initial permit to transport passengers.
The 10-year U.S. Treasury yield eased to 4.24% from 4.28% the previous day.
This Morning in Asia
In Japan, markets were closed due to a public holiday, but Nikkei futures rose by 0.2%.
In China, the CSI300 index fell by 0.66%, while the Shanghai Composite Index dropped by 0.46%. Hong Kong’s Hang Seng index tumbled 1.5%.
The U.S. dollar weakened this morning, losing 0.27% against the yen, at 148.25, while the euro stabilized at $1.0908, its highest level in five months. The British pound reached a four-month high of $1.3015 early in the session ahead of the Bank of England’s decision later today, where it is expected to keep interest rates unchanged.
Spot gold remained largely unchanged at $3,048.37 per ounce after hitting a record high of $3,055.96 earlier in the session.
Copper prices on the London Metals Exchange reached their highest level in more than five months on Thursday, with markets watching for potential U.S. tariffs on the metal. Nickel was the worst-performing base metal, falling 1.9%, as concerns over supply eased following news that Indonesia’s main nickel processing complex was unaffected by recent floods.
Chicago wheat futures rose, recovering losses from the previous session, as the dollar weakened and slower grain shipments from Russia, a key supplier, raised supply concerns. Soybeans rose for the first time in three sessions, while corn advanced for the second consecutive day.
Oil prices rose in early Thursday trading amid falling fuel inventories in the U.S. and rising tensions in the Middle East. Brent crude gained 40 cents (0.57%) to $71.18 per barrel, while West Texas Intermediate (WTI) rose 34 cents (0.51%) to $67.50 per barrel.
What Would a Day Be Without Trump?
Today, President Donald Trump is expected to sign an executive order that will facilitate the dismantling of the U.S. Department of Education, taking a step toward fulfilling a campaign promise.
According to reports, the order also ensures that throughout the process, there will be no disruption in the delivery of services, programs, and benefits that Americans rely on.
Mr. Trump will instruct his recently confirmed Secretary of Education, Linda McMahon, to take all necessary steps to prepare for the department’s closure and the transfer of its responsibilities to the states.
The executive order also states that any program or activity receiving remaining funds from the Department of Education must not promote diversity, equity, and inclusion (DEI) or gender ideology.
