The US Federal Reserve left interest rates unchanged. The Riksbank lowered its interest rate by 0.25%

At the end of the trading day, the Dow Jones Index (US30) fell by 0.10%. The S&P 500 Index (US500) fell by 0.03%. The Nasdaq (US100) Technology Index closed higher by 0.01%. Investors reacted to the Federal Reserve’s decision to leave interest rates unchanged and Fed Chairman Powell’s cautious tone amid growing geopolitical and economic uncertainty. Powell emphasized the Fed’s wait-and-see stance, citing uncertainty about the inflationary impact of President Trump’s tariffs and the risk of stagflation. Officials expect two rate cuts in 2025 but lowered growth expectations and raised inflation expectations.

Initial jobless claims in the US fell by 5,000 from the previous week to 245,000 for the week ending June 14, in line with market expectations, but held on to recent gains and were the fifth-highest reading since August 2023. At the same time, the number of applications for unemployment benefits in the previous week was 1,945,000, remaining at a more than three-year high of 1,951,000 recorded in the last week of May. The results reinforced the view that the US labor market is softening after initially resisting the economic uncertainty this year.

Visa, Mastercard, and PayPal each fell more than 4% after Congress passed the stablecoin bill.

In June, the Canadian dollar weakened to 1.37 per US dollar, retreating from its strongest level in eight months of 1.357, recorded on June 16. Expectations of a divergence in monetary policy with the US, weaker commodity prices, and geopolitical safe-haven flows undermined its recent gains. Traders are now pricing in more aggressive easing by the Bank of Canada compared to the Fed, which is narrowing the yield differential and undermining the loonie’s advantage.

European stock markets traded mixed on Wednesday. Germany’s DAX (DE40) fell by 0.50%, France’s CAC 40 (FR40) closed down by 0.36%, the Spanish IBEX35 (ES35) rose by 0.08%, and the British FTSE 100 (UK100) closed positive 0.08%. The annual core inflation rate in the Eurozone, excluding energy, food, alcohol, and tobacco prices, fell to 2.3% in May 2025 from 2.7% in the previous month, which was in line with preliminary estimates and below the market’s initial expectations of 2.5%. Although this figure remained above the 2% target, it was the lowest since October 2021, reinforcing calls from dovish members of the European Central Bank’s Governing Council for monetary policy easing and addressing growth concerns.

Sweden’s Riksbank cut its key interest rate by 25 basis points to 2% in June, in line with expectations, as the country’s economic recovery slows and inflation declines. Recent data points to weak growth and persistently high unemployment. The future course of monetary policy will depend on new data and how it affects inflation and growth expectations.

WTI oil prices fell more than 1% to $73.7 per barrel on Wednesday after rising to $76 at the start of the session, as President Trump hinted at the possibility of dialogue with Iran, easing fears of an inevitable conflict. While tensions remain high amid ongoing Iranian-Israeli military action, Trump refused to confirm plans for a US strike and said Iran had come to the negotiating table, although he called it “very late”.

Asian markets traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) rose by 0.90%, China’s FTSE China A50 (CHA50) added 0.07%, Hong Kong’s Hang Seng (HK50) fell by 1.12%, and Australia’s ASX 200 (AU200) showed a negative result of 0.12%.

On June 19, the Hong Kong Monetary Authority (HKMA) left its base rate unchanged at 4.75%, echoing the US Federal Reserve’s decision to keep its base rate at 4.25–4.50% for the fourth consecutive meeting, despite pressure from President Trump to lower rates. The HKMA’s policy remains in line with that of the Fed due to the Hong Kong dollar’s peg to the US currency.

Bank Indonesia kept its base interest rate unchanged at 5.5% at its June 2025 policy meeting, following a 25 bps cut in May, in line with market expectations. This decision was supported by lower inflation, stability in the rupiah exchange rate, and ongoing efforts to sustain economic growth. In May 2025, annual inflation fell to 1.60% from an eight-month high of 1.95% in April.

The Australian dollar fell to $0.648 on Thursday, reversing the previous session’s significant gains, after labor market data reinforced the Reserve Bank of Australia’s view that monetary policy needs to be eased. Markets now see an 80% chance that the RBA will cut its key interest rate from 3.85% to 3.6% at its July 8 meeting, with two more cuts expected later this year.