Powell’s Power worked: Will it last? 20/03/2025

HOT stories for today

 

US market wrap:
 

• The future remains undeniably unpredictable, yet Federal Reserve Chair Jerome Powell provided a composed yet intricate perspective on the trajectory of the U.S. economy and inflation on Wednesday—delivering remarks that investors credited with propelling the S&P 500 to its strongest showing on a “Fed day” since July. The Dow Jones Industrial Average (DJIA) climbed 0.9%, while the S&P 500 (SPX) gained 1.1%, and the tech-centric Nasdaq Composite (COMP) surged 1.4%.
• Hours after the Federal Reserve reaffirmed its projection for two interest-rate reductions later this year, former President Donald Trump weighed in Wednesday night, advocating for rate cuts to accompany his newly announced tariffs. With the majority of earnings reports now behind us, macroeconomic unpredictability and geopolitical tensions remain the primary concerns for investors.
  
   

Powell’s Power worked: Will it last?
 

• The Federal Reserve expects higher inflation and slower economic growth due to uncertainty from Trump’s tariffs. While keeping interest rates at 4.25% to 4.5%, policymakers reaffirmed their projection of two rate cuts in 2025. Fed Chair Jerome Powell attributed much of the inflation forecast revision to tariffs but noted that, despite rising recession concerns, a severe downturn remains unlikely. As he spoke, stocks hit intraday highs.
• Concerns over tariffs have complicated the Fed’s rate-cut decisions. Powell acknowledged elevated uncertainty, stating, “We will need to see how things actually unfold.” The Fed remains open to two rate cuts in 2025 but is waiting for more clarity. A hawkish signal emerged as eight Fed officials—up from four in December—now foresee just one or no cuts this year.
   

 
Stocks on the move: 
      

• Autodesk (ADSK) shares rose nearly 4% after activist investor Starboard Value signaled plans for a proxy battle, aiming to nominate a minority slate of directors ahead of the company’s upcoming annual meeting. 
• MicroStrategy (MSTR), now operating as Strategy, gained 5.2% after announcing plans to issue additional securities to fund cryptocurrency acquisitions. The company remains the largest corporate holder of Bitcoin. 
• Intel (INTC) slid over 5%, making it the worst performer in the S&P 500 for the day, though it remains up more than 18% over the past year. 
• Boeing (BA) jumped 6.3% after CFO Brian West provided an optimistic outlook at an investor conference, citing lower cash burn and improved factory operations. West also downplayed concerns over Trump’s tariffs, saying their impact depends on how long uncertainty lingers.
   

Today’s action

• Asia-Pacific markets saw mixed trading on Thursday as China’s central bank held interest rates steady, following the U.S. Federal Reserve’s decision to keep benchmark rates unchanged overnight. Hong Kong’s Hang Seng Index dropped 1.36%, while mainland China’s CSI 300 edged down 0.17%, as Beijing balanced economic growth support with currency stability amid rising trade tensions. The People’s Bank of China maintained the 1-year loan prime rate at 3.1% and the 5-year LPR at 3.6%, unchanged since a 25-basis-point cut in October. Japan’s markets remained closed for a holiday.
• Meanwhile, U.S. stock futures ticked higher Wednesday night after major indexes rallied on the Fed’s reaffirmed outlook for two interest rate cuts in 2025. Dow Jones Industrial Average futures gained 71 points (0.2%), S&P 500 futures rose nearly 0.3%, and Nasdaq 100 futures advanced about 0.4%. Investors are watching weekly jobless claims, the Philadelphia Fed’s manufacturing survey, and existing home sales data on Thursday. On the earnings front, Darden Restaurants, Nike, FedEx, and Micron Technology are set to report their quarterly results.

Watchlist: NVDA, SMCI, TSLA, DRI, NKE, FDX, MU, ACN, PDD
 

Bitcoin

• Bitcoin surged to an intraday high of $87,470 at 8 p.m. ET on Wednesday, March 19, 2025, as optimism grew around political, regulatory, and macroeconomic factors. Crypto markets found support from political developments, including President Donald Trump’s upcoming speech at the Digital Asset Summit in New York City.
• Institutional interest remained strong, with U.S. spot bitcoin ETFs recording $209 million in net inflows on March 18. Some analysts predict these funds could hold over 1.5 million BTC by 2026. Meanwhile, North Carolina lawmakers introduced a bill to allow state funds to allocate up to 10% to bitcoin, highlighting growing public-sector adoption.
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176
   

Forex

• The Japanese Yen (JPY) remains strong in Thursday’s Asian session, supported by BoJ rate hike expectations and rising geopolitical tensions. A narrowing rate gap between Japan and other economies continues to pressure USD/JPY, pulling it closer to 148.00. Investors anticipate strong wage growth will drive inflation, reinforcing bets on further BoJ tightening.
• Meanwhile, EUR/USD hovers around 1.0900, extending losses ahead of ECB President Christine Lagarde’s speech. The U.S. dollar remains under pressure as Treasury yields fall after the Fed reaffirmed two rate cuts in 2025. Germany’s economic stimulus plan could boost inflation, while uncertainty over Trump’s tariff policies keeps markets cautious.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-150
   

Basic Materials

• West Texas Intermediate (WTI) crude edged higher to $67.20 in early Asian trading on Thursday, supported by escalating geopolitical tensions as the Israeli military resumed operations in Gaza. However, gains may be limited as the Federal Reserve’s decision to keep interest rates unchanged weighs on market sentiment. Meanwhile, U.S. crude stockpiles increased by 1.745 million barrels last week, according to the EIA.
• Gold (XAU/USD) hit a fresh record high but struggled to sustain momentum in the European session as traders hesitated amid slightly overbought conditions and a positive risk tone. Dovish Fed expectations kept the U.S. dollar subdued, supporting gold prices. However, uncertainty surrounding President Donald Trump’s aggressive trade policies and their potential economic impact continues to underpin safe-haven demand.
  Watchlist: GOLD 2600-3050, US Oil: 65.00-79.00

Key Economic Events Today:

EST time

08:30 am: USD Unemployment Claims
08:30 am: USD Philly FED Manufacturing Index
10:00 am: USD Existing Home Sales
10:00 am: USD CB Leading Index

Earnings

BMO (Before the US Market opens)
ACN            Accenture plc
PDD            PDD Holdings
DRI             Darden Restaurants
JBL             Jabil Inc.
AMC (After the US Market closes): NKE, FDX, MU, LEN

The TEFS Analyst team wishes you a successful day!