Fed's Rate Decision and Market Reactions
This week, U.S. stock markets experienced notable fluctuations, influenced by key economic data and the Federal Reserve's actions. Yesterday, the Fed announced it would keep interest rates unchanged at 4.25% to 4.5%, citing economic uncertainty and the complex effects of recent trade policies. Fed Chair Jerome Powell highlighted the lingering impact of tariffs imposed during the previous administration, which have contributed to inflationary pressures. The decision came alongside revised economic projections, with the Fed lowering its growth forecast for 2025 and raising inflation expectations. Despite these concerns, the stock market reacted positively, with major indices climbing after the announcement. Looking at U.S. stock market performance, the S&P 500 (SPX.I) gained 1.36% this week but is down 3.51% year-to-date, while the NASDAQ Composite (NASD.I) increased by 0.58%, but remains down 8.08% for the year. Smaller-cap stocks, such as the Russell 2000 (RLS.I), saw a stronger weekly performance, rising by 1.35%, though it’s down 8.47% year-to-date. Volatility indices also saw declines, with the CBOE SPY VIX (VIX.I) dropping by 17.73%, suggesting less market fear in the short term. On the positive side, the New York Composite (NYSE.I) rose by 1.94% this week, and the AMEX Composite (AMEX.I) saw a notable weekly gain of 4.73%. Global markets also displayed a mixed performance, with Canada’s S&P/TSX Composite (TSX.I) gaining 2.64% this week and turning slightly positive year-to-date at +1.38%. The biggest gain in Canada actually came from the S&P/TSX Venture Composite (JX.I) led with a 3.98% weekly gain and a 6.79% gain year-to-date. While some global indices have shown resilience, concerns about inflation and potential stagflation continue to weigh on investor sentiment, leaving many cautious as we move further into 2025. In terms of commodity performance, big gains were made in Natural Gas where North American futures climbed by 3.88%, while the UK equivalent moved higher by 1.95%. Other movers were High Grade Copper Futures, where the green metal was up by 5.17%, while the shiny metal Gold gained 3.20%. The remainder of the commodities were more or less flat, keeping the overall commodities asset class in the #5 position within the SIA Asset Class ranking.
Copper's Strong Technical Support and Potential Breakout
Natural Gas: Breakout and Future Resistance Levels
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