Global Market Quick Take: Asia – June 19, 2025

Global Market Quick Take: Asia – June 19, 2025

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Key points:

• Macro: Fed maintains rates with 2 cuts expected this year
• Equities: Visa, Paypal and Mastercard fall after stablecoins act passed
• FX: USD strengthens after FOMC rate decision
• Commodities: Oil above $75 due to Middle East tensions
• Fixed income: Yields ended flat for the day after FOMC

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Federal Reserve maintained the federal funds rate at 4.25%–4.50%, as expected, to assess the impact of President Trump's policies. Despite reduced uncertainty, it remains high. The Fed plans two rate cuts this year and one quarter-point cut in 2026 and 2027.
• 2025 dot plot remains unchanged at 3.9%, indicating 50 basis points of cuts this year. However, the 2026 dot plot was revised upward to 3.6% from 3.4%, and the 2027 projection increased to 3.4% from 3.1%.
• US housing starts fell 9.8% in May 2025 to 1.256 million units, below expectations of 1.36 million, marking the weakest level since May 2020. High mortgage rates and excess supply of homes dampened builder sentiment and construction activity.
• US initial jobless claims dropped by 5,000 to 245,000 for the week ending June 14th, aligning with expectations and marking the fifth highest since August 2023. Continuing claims were at 1,945,000, close to the three-year high, signalling a softening labour market amid economic uncertainty.

Equities:

• US - Stocks fluctuated Wednesday as the Fed held rates steady and Powell's cautious remarks amid geopolitical uncertainty impacted markets. S&P 500 closed slightly lower, the Dow fell 44 points, and the Nasdaq rose 0.1%. Powell noted uncertainty over Trump's tariffs and stagflation risks, projecting two rate cuts in 2025 with adjusted growth and inflation forecasts. Trump confirmed Iran's interest in talks but left military action possible, unsettling investors. Visa, Mastercard, and PayPal fell over 4% after Congress passed the stablecoins act while Coinbase gained 16.3%.
• Hong Kong - HSI fell 1.1% on Wednesday as hopes for resolving the Israel-Iran conflict faded. A financial forum in China offered few new policy signals, leading to sector-wide losses, with property, tech, and consumer stocks hit hardest. Li Auto dropped 4.1% after a shareholder cut its stake, impacting Nio (-2.4%), BYD (-1.3%), and Geely (-1.1%). Perfect Medical Health plunged 19% to a five-year low after forecasting lower FY25 profits, while Yadea Group rose 2.6% on strong earnings expectations.

Earnings this week:

FX:

• US Dollar strengthened after Fed Chair Powell's press conference, while President Trump maintained uncertainty regarding US involvement in the Israel-Iran conflict. GBPUSD approaching 1.34, USDCHF closing to 0.82. AUDUSD and NZDUSD strengthened slightly reaching above 0.65 for AUDUSD and above 0.6030 NZDUSD. USDJPY trading at 145.

Commodities:

• Gold and Silver trade lower after FOMC but Oil is above $75 as markets assess increased tensions between Israel and Iran.

Fixed income:

• Treasury yields stayed steady until the Fed's outlook on rates, growth, and inflation sent yields lower, especially at the short end. The Fed now forecasts growth of 1.4% this year and 1.6% next year, down from March's projections of 1.7% and 1.8%.

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