Australia sees inflationary pressures easing. Bitcoin has reached a 3-month low

At the end of Tuesday, the Dow Jones Index (US30) was up 0.37%. The S&P 500 Index (US500) was down 0.47%. The Nasdaq Technology Index (US100) fell by 1.24%. Investor sentiment continued to be pressured by geopolitical and trade tensions after President Trump confirmed the imposition of tariffs on Mexican and Canadian imports, previously delayed by a month. There were also reports that the US was tightening restrictions on China’s chip industry. The technology, communication services, and utilities sectors fared the worst, while real estate, materials, and consumer staples were the gainers.

Today, investors are awaiting Nvidia’s earnings report, which could be a new catalyst for the market. Nvidia, like other AI-related stocks, has recently come under pressure due to concerns over China’s DeepSeek project, raising doubts about the sustainability of the AI rally. Market participants are also awaiting the second estimate of fourth-quarter GDP growth at the end of the week, as well as the upcoming PCE Price Index report, which will provide key insights into the outlook for the economy and monetary policy.

BTC/USD fell below $88,000, its lowest in 3 months, as concerns over a slowing US economy, rising inflation, and Trump’s aggressive trade policies eroded investor confidence. Bitcoin has fallen about 20% since Trump’s inauguration in January as initial optimism over his digital-asset-friendly stance fades. Other major digital assets, including ETH and SOL, have also declined, and bitcoin ETFs saw record outflows of nearly $1 billion in February. Industry issues such as the $1.5 billion hack of Bybit also dampened sentiment.

Equity markets in Europe traded flat on Tuesday. Germany’s DAX (DE40) fell by 0.07%, France’s CAC 40 (FR40) closed down 0.49%, Spain’s IBEX 35 (ES35) added 0.80%, and the UK’s FTSE 100 (UK100) closed positive 0.11%. Eurozone wages were 4.12% year-on-year in the fourth quarter of 2024, slowing from the 31-year high of 5.43% recorded in the previous quarter. The data brought some relief to European Central Bank policymakers as they continue their efforts to contain inflation while supporting sluggish economic growth. The ECB recently announced its plans to continue easing monetary policy, with money markets anticipating at least two interest rate cuts before the end of December.

The formation of a new government coalition in Germany also remains in the spotlight. Conservative leader Friedrich Merz intends to strike an agreement with the SPD “in the near future,” while talks on increased defense spending continue. On the corporate front, shares of Siemens Energy and Infineon Technologies are down 7.3% and 2.6% respectively amid concerns over US restrictions on the Chinese technology sector and ahead of Nvidia’s earnings report.

WTI crude oil prices were trading near $69 a barrel on Wednesday, near their lowest level since last December, as US economic concerns and broader market uncertainty put pressure on the outlook for energy demand. President Trump’s foreign policy also put pressure on oil, with the prospect of a peace deal between Russia and Ukraine raising expectations of the lifting of Russian sanctions, which would pave the way for more Russian oil exports.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) fell by 1.39%, China’s FTSE China A50 (CHA50) lost 1.14%, Hong Kong’s Hang Seng (HK50) decreased by 1.32%, and Australia’s ASX 200 (AU200) was negative 0.68%. Hong Kong stocks rose by 2.3% on Wednesday, reversing a weak session the previous day amid strong gains across sectors. The mood was upbeat as the city’s Financial Secretary Paul Chan is due to unveil his plan to reduce Hong Kong’s deficit while mitigating the negative effects of a slowing Chinese economy and rising trade tensions with the US.

The Australian dollar fell below $0.633 on Wednesday, nearing two-week lows, as weaker-than-expected economic data fueled expectations of further interest rate cuts by the Reserve Bank of Australia (RBA). Australia’s monthly Consumer Price Index was unchanged at 2.5% in January, defeating expectations of a slight rise to 2.6%. On the external front, the Aussie faced additional pressure from US President Donald Trump’s tariff proposals, which could disrupt global trade and negatively impact export-dependent economies such as Australia.