Starting our week of news across the pond, US inflation fell more than expected in February to 2.8%, down from 3.0% in January, paving the way for the Federal Reserve to cut interest rates as the world’s largest economy shows signs of slowing. This was below the 2.9% expected according to a poll by Reuters. Futures markets continue to price in two rate cuts this year, although the chances of this ticked up slightly after the data release. However, Fed chair Jay Powell has suggested rates will be kept on hold at next week’s meeting. On Wednesday, the Bank of Canada cut rates by a quarter of a percentage point due the expected economic impact of “heightened trade tensions and tariffs imposed by the United States”.
Starting our week of news across the pond, US inflation fell more than expected in February to 2.8%, down from 3.0% in January, paving the way for the Federal Reserve to cut interest rates as the world’s largest economy shows signs of slowing.
On Thursday, the S&P500 closed down 1.4%, contributing to a drop of more than 10% since the index hit a record high on 19th February, putting the blue-chip index into correction territory. The tech-heavy Nasdaq declined 2%, as investors flocked to safe-haven asset gold, pushing the yellow metal to a new all-time high of $2,985 per troy ounce. Investors are becoming more concerned that President Trump’s sweeping tariffs will impact US economic growth, with sentiment also hit by concerns over how a potential ceasefire between Russia and Ukraine would be implemented.
The tech-heavy Nasdaq declined 2%, as investors flocked to safe-haven asset gold, pushing the yellow metal to a new all-time high of $2,985 per troy ounce.
Back to home soil, according to data released today by the Office for National Statistics, the UK economy unexpectedly shrunk 0.1% in January, reiterating the challenges faced by chancellor Rachel Reeves to grow the economy as her Spring Statements nears. The figure was far below the 0.4% growth achieved in December. In October, the Office for Budget Responsibility had forecasted economic growth of 2.0% for 2025, but they are expected to release a new downgraded forecast alongside the Spring Statement, making the chancellor’s job all the more difficult.
Our specialist's final thought
"In October, the Office for Budget Responsibility had forecasted economic growth of 2.0% for 2025, but they are expected to release a new downgraded forecast alongside the Spring Statement, making the chancellor’s job all the more difficult."
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