The Bank of Canada unexpectedly kept its rate at 2.75%. A private report on the US labor market points to weakness

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.22%. The S&P 500 Index (US500) rose by 0.01%. The Nasdaq (US100) Tech Index closed up 0.32%. Investors digested a sharp slowdown in private sector employment growth, as the ADP report showed only 37,000 new jobs in May, significantly below expectations and the lowest figure in two years. This data cast a shadow over the upcoming nonfarm payrolls report, raising concerns that trade policy uncertainty is putting pressure on the labor market. Activity in the services sector also declined in May, further heightening concerns about the broader economic outlook. Meanwhile, President Trump doubled tariffs on steel and aluminum imports to 50% and lashed out at Fed Chairman Powell, renewing pressure for interest rate cuts. Hopes for a resolution to trade relations between the US and China dimmed as Trump called Xi Jinping “extremely difficult to work with.”

The Bank of Canada unexpectedly left its base interest rate unchanged at 2.75% in its June 2025 decision (more than 60% of correspondents expected a 0.25% rate cut), which was the second rate hold after a 2.25% point cut in seven consecutive decisions. The Governing Council noted that the ongoing increase and decrease in various US tariffs, combined with the highly uncertain outcome of bilateral trade negotiations and tariff rates remaining significantly above early 2025 levels, create risks of slower growth and raise inflation expectations, which requires caution regarding the continuation of monetary policy easing. The Canadian dollar strengthened to $1.37 per US dollar, its highest level in nearly eight months.

European stock markets traded without a single trend yesterday. The German DAX (DE40) rose by 0.77%, the French CAC 40 (FR40) closed up 0.53%, the Spanish IBEX35 (ES35) lost 0.19%, and the British FTSE 100 (UK100) closed positive 0.16%. European stocks rose on Wednesday, thanks to new tax stimulus measures and progress in trade negotiations between the EU and the US. The German DAX Index rose to a new record high after the government approved a €46 billion tax relief package for the period 2025–2029, aimed at supporting businesses and reviving economic growth. In corporate news, Airbus shares soared more than 4% after reports that Chinese airlines are considering ordering up to 300 aircraft, with a potential deal likely to be concluded as early as next month during a planned visit by European leaders to Beijing.

Silver prices held steady at around $34.50 per ounce on Thursday, reaching their highest level in seven months, as a wave of disappointing economic data from the US put pressure on the dollar and increased demand for safe-haven assets.

WTI oil prices fell more than 1% to below $63 per barrel as Saudi Arabia said it may demand a significant increase in production, heightening concerns about oversupply in the global oil market. The kingdom is reportedly seeking for OPEC+ to increase production by at least 411,000 barrels per day in August and possibly September, seeking to capture market share during peak summer demand. This comes after an increase in production for July was announced over the weekend.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.80%, China’s FTSE China A50 (CHA50) added 0.11%, Hong Kong’s Hang Seng (HK50) increased by 0. 60%, and Australia’s ASX 200 (AU200) showed a positive result of 0.89%.

Nominal wages in Japan rose 2.3% year-on-year in April 2025, in line with the pace seen in March but below market expectations of 2.6% growth. Meanwhile, real wages, adjusted for inflation and a key indicator of consumer purchasing power, fell by 1.8%, marking the fourth consecutive month of decline. The weak real wage data underscores the ongoing problem of persistent inflation, which continues to outpace wage growth.

Australia’s trade surplus narrowed to 5.41 billion Australian dollars compared to a slightly revised figure of 6.89 billion Australian dollars in the previous month and below market expectations of 5.90 billion Australian dollars, as exports declined and imports rose. Exports fell 2.4% from the previous month to 44.08 billion Australian dollars. Meanwhile, imports rose by 1.1% to 38.66 billion Australian dollars, recovering from a revised 2.4% decline in the previous month.