The focus is on the BoC meeting. The OECD has lowered its expectations for global economic growth

US stocks rose on Tuesday, thanks to higher tech prices and strong labor market data. At the end of Tuesday, the Dow Jones (US30) Index rose by 0.51%. The S&P 500 (US500) Index added 0.58%. The Nasdaq (US100) Tech Index closed up 0.79%. A stronger-than-expected JOLTS report showed that the number of job openings in April rose by 191,000 to 7.391 million, indicating a resilient labor market despite trade factors. However, the OECD lowered its US economic growth expectations for 2025 to 1.6% from 2.2%, citing political uncertainty and ongoing tariff tensions.

The OECD expects that global economic growth will slow this year, reaching 2.9% in 2025 and 2026, compared to 3.3% last year. The group attributes the downgrade to increased global uncertainty, mainly caused by changes in US trade policy under President Trump.

Today, the Bank of Canada will hold a meeting on monetary policy. Analysts at major financial institutions believe that the continuing softness of the labor market could pave the way for the Bank of Canada to make two additional rate cuts this year, despite recent inflationary pressures. In the context of ongoing trade tensions with the US, economists argue that two 25 basis point rate cuts could provide modest economic support without significantly increasing inflation risks. This implies a potential reduction in the policy rate from the current level of 2.75% to 2.25% by the end of the year. A rate cut, accompanied by a signal of a pause until the fall, could provide moderate support for the Canadian dollar. If the Bank of Canada decides at its meeting to keep the current rate at 2.75%, this is likely to be perceived as a hawkish stance.

European stock markets traded without a single trend yesterday. The German DAX (DE40) rose by 0.67%, the French CAC 40 (FR40) closed up 0.34%, and the Spanish IBEX35 (ES35) fell by 0.52%, and the British FTSE 100 (UK100) closed up 0.15%. The Frankfurt DAX Index added 0.7% and closed at a weekly high of 24,092 on Tuesday, recovering from yesterday’s losses and outperforming its regional competitors. Market sentiment improved as weaker-than-expected inflation data in the Eurozone reinforced expectations of a 25 basis point ECB rate cut later this week. However, the gains were tempered by renewed concerns about global growth after the OECD lowered its economic expectations and political uncertainty in the Netherlands intensified following the collapse of the ruling coalition.

WTI crude oil prices fell to $63 per barrel on Wednesday, extending losses from the previous session, as markets weighed OPEC+ plans to increase production against growing economic concerns over tariffs. On Tuesday, the OECD lowered its global growth expectations, citing growing pressure on the US economy due to escalating trade tensions. Further losses were limited by industrial data showing a larger-than-expected decline in US crude oil inventories: last week, inventories fell by 3.3 million barrels, much more than the expected decline of 0.9 million barrels.

Asian markets traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) fell by 0.06%, China’s FTSE China A50 (CHA50) lost 0.43%, Hong Kong’s Hang Seng (HK50) rose by 1.53%, and Australia’s ASX 200 (AU200) showed a positive result of 0.63% on Tuesday. Shares in Hong Kong rose by 114 points to 23,626 around midday on Wednesday, marking the second consecutive session of gains amid a strengthening of mainly consumer and technology sectors. Hong Kong intends to issue infrastructure and “green” bonds in offshore yuan, Hong Kong dollars, euros, and US dollars as part of a government sustainable bond program.

Australia’s GDP in the first quarter was only 0.2%, significantly below expectations and previous quarters, which reinforced prognoses of further RBA rate cuts. The Reserve Bank of Australia, which has already cut rates twice this year and even considered a more significant cut in May, is expected to downgrade its economic expectations further, and markets now estimate the probability of another rate cut in July at 80%.