This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
The Reserve Bank of India reduced the repo rate by 25 basis points on Friday. The Bank of England had slashed interest rates by 25 basis points the day before, after the European Central Bank had done the same on January 30.
As authorities seek to increase economic growth, many economies acclimate to a lower-rate environment. This stands in sharp contrast to the United States, where, given the uncertainty surrounding the economic effects of U.S. President Donald Trump’s policies, it is doubtful if the U.S. Federal Reserve would even carry out its December estimate of two rate cuts in 2025. Furthermore, it appears that Trump has retreated from putting pressure on the Fed.
What To Note Today
As indicated by the U.S. dollar index, the U.S. dollar started to gain strength before Trump’s inauguration and reached its best level in over two years. Companies like Amazon have already been impacted by this, claiming that the currency has reduced their projected revenue for the current quarter.
For now, the United States may have an advantage over other stock markets and economies, but an advantage can work both ways.
India’s first rate reduction in almost five years
In a live-streamed speech on Friday, Governor Sanjay Malhotra announced that the Reserve Bank of India had lowered its repo rate by 25 basis points to 6.25%. Economists predicted the move, which marked the central bank’s first rate cut in almost five years. The RBI predicted that real GDP growth will be 6.7% in fiscal year 2025–2026 and 6.4% in the current fiscal year, the lowest in four years.
Bank of England cuts rates
For the first time this year, the Bank of England dropped its benchmark interest rate by 25 basis points to 4.5%. Two of the nine monetary policy committee members had voted for a more significant drop of 50 basis points, but all of them had voted to lower rates. The central bank governor, Andrew Bailey, stated that he anticipates more cutbacks this year. The BOE also cut its 2025 growth prediction for the UK economy in half, from 1.5% to 0.75%.
Amazon’s disappointing advice
After providing underwhelming revenue guidance for the current quarter and pointing to challenges brought on by a strong US dollar, Amazon’s stock plummeted more than 4%. Additionally, it revealed intentions to invest $100 billion in capital projects in 2025, primarily in infrastructure related to artificial intelligence. The internet behemoth is on track to overtake Walmart as the S&P 500 firm with the largest quarterly sales after exceeding earnings and revenue projections for the fourth quarter.
Gains in succession for the S&P 500
The Nasdaq Composite increased 0.51% on Thursday, while the S&P 500 gained 0.36% for its third straight day. On the other hand, the Dow Jones Industrial Average fell 0.28%. India’s Nifty 50 remained unchanged after the RBI reduced interest rates, while Japan’s Nikkei 225 fell by 0.6% after the nation’s household spending in December surprisingly increased annually.
Trump is concentrating on yields rather than rates
In an interview with Fox News on Wednesday, Treasury Secretary Scott Bessent stated that the Trump administration is not “calling for the Fed to lower rates” but is concentrating on utilizing fiscal policy to maintain a low 10-year Treasury yield. Trump’s vow to “demand that interest rates drop immediately” has changed.
IBM outperforms Nvidia
Over the last three months, IBM has been the Dow’s top-performing stock, increasing 27%. It is not Nvidia, Apple, or Amazon. However, one chief investment officer believes that for the tech company’s stock to continue to perform well, it needs to invest more in artificial intelligence.
Bottom Line
In an early response to Trump’s trade battle, China has blacklisted the owners of Tommy Hilfiger and Calvin Klein, potentially forcing the companies to close their factories and stores there.Â
Beijing formally added PVH to its “unreliable entities” list on Tuesday. However, the Chinese Ministry of Commerce had already started looking into the company in September for reportedly refusing to source cotton from the Xinjiang region, which is well-known for its Uyghur internment camps.Â
