The Bank of Japan just lifted interest rates to 0.5%, their highest level since the 2008 financial crisis, with growing confidence that rising wages and consumer prices can sustain inflation near their 2% target. Policymakers see a path to ending Japan’s decades-long battle with stagnant growth and deflation—though one board member pushed back, arguing the economy still needs more support, even with companies promising another round of strong pay hikes this spring. The central bank also bumped up its inflation forecasts for the next three years, pointing to higher food and energy costs, a weaker yen, and labour shortages as key drivers pushing prices higher. Markets remain wary of global trade risks under the new U.S. administration and whether Japan can keep raising rates without derailing its fragile economic recovery. Governor Kazuo Ueda stressed future moves depend on how the economy holds up, leaving the door open for more hikes but avoiding any firm commitments.
EQUITY
The S&P 500 hit a fresh high on Thursday, pushed by President Trump's comments at the World Economic Forum. GE Aerospace broke above $200 a share, jumping 6.6% on its fourth-quarter earnings with a positive 2025 profit forecast while EA gapped down, slashing its profit guidance. The tech sector is still high on the $500 billion Stargate project announcement, with AI-enabled pharma Moderna gaining on Oracle CEO Larry Ellison's comment.
GOLD
Gold prices are consolidating near record highs after President Trump asked the Fed to lower rates while geopolitical tensions and central bank demand from China and Russia continue. Analysts remain bullish long-term, looking at gold’s resilience against rising bond yields and a strong dollar in late 2024, with technical indicators pointing to a 26-year uptrend and potential targets around $3,000-$3,350 as inflation and U.S. debt concerns linger.
OIL
U.S. crude oil inventories fell for a ninth consecutive week, while gasoline stocks rose to an 11-month high and distillates saw a sharp decline. Oil prices go against the data even with tightening supplies, pressured by President Trump’s calls for Saudi Arabia and OPEC to lower prices, though analysts doubt immediate compliance, citing OPEC’s likely preference to withhold production until WTI nears $80 and Brent at $85.
CURRENCY
Trump's softer stance on China has been detrimental to the dollar's reign, triggering its selloff since inauguration. The yuan hit a six-week high, climbing 1.1% against the dollar after Trump expressed a preference for negotiation over tariffs, pushing the dollar index almost 1.5% lower, with the euro and sterling gaining ground. Yen performance was subpar even after announcing a rate cut, holding near the 155 level.
