每周主要事件 FOMC, BoC, and BoJ expectedly kept interest rates unchanged

By the end of Wednesday, the Dow Jones Index (US30) declined by 0.38%. The S&P 500 Index (US500) fell by 0.12%, while the tech-heavy Nasdaq Index (US100) closed higher by 0.15%. The US stocks ended mostly lower on Wednesday after the Federal Reserve kept interest rates unchanged at its July meeting, as investors digested a wave of earnings reports. Fed Chair Jerome Powell noted that the Fed is still assessing the impact of Trump-era tariffs on inflation, which tempered expectations for near-term rate cuts. The decision was not unanimous: Fed governors Michelle Bowman and Christopher Waller supported a 25-basis-point rate cut.

Investors also evaluated corporate earnings: Humana, Kraft Heinz, and Visa gained on strong results, while Starbucks dropped over 1% despite higher revenue. Meanwhile, trade tensions escalated as President Trump announced 25% tariffs on Indian goods and 50% tariffs on Brazilian imports.

The Canadian dollar fell to 1.38 per US dollar, its weakest level in two months, pressured by a stronger US dollar, while Canada’s monetary and economic environment had little impact on the Loonie. The Bank of Canada’s decision to keep its key rate at 2.75%, the third pause after seven cuts. This highlighted policymakers’ caution amid ongoing tariff uncertainty, an expected GDP slowdown in Q2 (after exporters front-loaded shipments in Q1), and projections that CPI inflation will remain close to the 2% target in the medium term.

European stock markets were mostly up yesterday. Germany’s DAX (DE40) gained 0.19%, France’s CAC 40 (FR40) closed up by 0.06%, Spain’s IBEX35 (ES35) added 0.23%, and the UK’s FTSE 100 (UK100) ended slightly higher by 0.01%. Investors evaluated a range of regional economic data and fresh corporate earnings while keeping an eye on trade talks. Germany’s economy contracted by 0.1% in Q2, reversing a 0.4% growth in Q1. Meanwhile, the German cabinet approved a draft 2026 budget featuring a record €126.7 billion in investments and €174 billion in planned borrowing.

On the corporate front, Siemens Healthineers rose around 2% on strong Q3 results and updated expectations, and Porsche AG gained 1.7% as investors welcomed its strategic restructuring despite a projection cut due to €400 million in tariff-related losses. Among decliners, Adidas plunged over 11% after missing revenue targets, and Mercedes-Benz dropped 3.4% after H1 profit halved and its full-year revenue outlook was lowered.

WTI crude oil prices climbed above $70 per barrel on Wednesday, holding at a five-week high, driven by concerns over supply after President Donald Trump pressured Russia to shorten the timeline for ending the war in Ukraine. Trump gave Moscow a 10-day ultimatum to propose a satisfactory resolution or face consequences, including 100% secondary tariffs on countries continuing trade with Russia. These measures could significantly disrupt oil markets, as key US trading partners, major buyers of Russian oil, might reduce or halt purchases.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) declined by 0.05%, China’s FTSE China A50 (CHA50) rose by 0.17%, Hong Kong’s Hang Seng (HK50) dropped by 1.36%, and Australia’s ASX 200 (AU200) ended the day with a gain of 0.60%.

Official PMI data from China indicated a slowdown in July, with the composite PMI falling to a three-month low of 50.2 from June’s 50.7. Manufacturing activity remained in contraction, slipping to 49.3 from 49.7, while the services PMI declined to 50.1 — the weakest in eight months — from 50.5. Despite weak data, sentiment found some support from Wednesday’s Politburo meeting.

At its July meeting, the Bank of Japan left its short-term policy rate unchanged at 0.5%, maintaining borrowing costs at their highest level since 2008, in line with market expectations. The decision was unanimous, reflecting the Central Bank’s cautious stance on policy normalization. In its quarterly outlook, the BoJ raised its core inflation expectations for fiscal year 2025 to 2.7%, up from April’s 2.2%, while expecting it to drop to 1.8% in FY2026 and rise again to 2.0% in FY2027. The GDP growth estimate for FY2025 was slightly raised to 0.6% from 0.5%, while the FY2026 growth projection remained unchanged at 0.7%.