Background on Key Figures and Institutions
The recent fluctuations in the US stock market and the dollar are influenced by ongoing trade discussions between the United States and Japan. Jerome Powell, the President of the Federal Reserve (Fed), has expressed caution regarding potential interest rate cuts. Meanwhile, Donald Trump, the President of the United States, unexpectedly joined talks in Washington with a Japanese delegation, stating that significant progress had been made in discussions with Japan’s chief negotiator, Ryosei Akazawa.
Market Performance at the Time of Reporting
At 13:38 GMT (7:38 a.m. CDMX), the Dow Jones Industrial Average fell 500.86 points, or 1.26%, to 39,168.53; the S&P 500 gained 7.94 points, or 0.15%, to 5,283.64; and the Nasdaq increased by 4.90 points, or 0.03%, to 16,312.06.
- Tech stocks were supported by TSMC’s better-than-expected earnings, contrasting with previous warnings from major players Nvidia and ASML.
- The European Central Bank (ECB) reduced interest rates by 25 basis points, as anticipated, amid trade uncertainty.
- The ECB stated that the uncertainty would likely decrease consumer and business confidence, and market volatility would have a restrictive effect on monetary conditions.
- The STOXX 600 declined following the ECB’s decision but was still on track for a 4.2% weekly gain; the euro, near three-year highs against the dollar, fell 0.5% to 1.1347 dollars.
- The US dollar rose 0.5% against the Japanese yen, at 142.5 yen, and 0.7% against the Swiss franc, at 0.8188 francs, both safe-haven currencies that have benefited from market turbulence.
Commodity Market Developments
In the commodities market, gold reached a new all-time high of $3,357.40 per ounce due to safe-haven flows and dollar selling.
- Oil prices increased on expectations of lower supply, with Brent crude futures rising 1.3% to $66.7 per barrel.
Key Questions and Answers
- What is driving the recent movements in US stocks and the dollar? Ongoing trade discussions between the United States and Japan are fueling optimism, while caution from Fed President Jerome Powell and market volatility are also influencing the markets.
- Who participated in the unexpected trade talks in Washington? US President Donald Trump joined discussions with a Japanese delegation, stating that significant progress had been made.
- How did the European Central Bank respond to trade uncertainty? The ECB reduced interest rates by 25 basis points and acknowledged that the uncertainty would likely decrease consumer and business confidence, along with having a restrictive effect on monetary conditions.
- What factors contributed to the rise in gold prices? Safe-haven flows and dollar selling drove gold to a new all-time high of $3,357.40 per ounce.
- Why did oil prices increase? Expectations of lower supply due to market dynamics led to a 1.3% rise in Brent crude futures to $66.7 per barrel.
