Finance industry groups are urging the Basel Committee on Banking Supervision to pause restrictive crypto asset standards set to be implemented in January 2026, arguing that the regulations make it uneconomical for banks to participate meaningfully in cryptocurrency markets. The industry coalition, including major financial associations and crypto groups, contends that the crypto market has evolved significantly since the 2022 standards were established, making the current approach too conservative given the sector's growth and increasing integration with mainstream finance. Meanwhile, Federal Reserve Vice Chair Michelle Bowman has signalled a notable shift in regulatory thinking by proposing that Fed staff should be allowed to hold limited amounts of digital assets to gain practical experience for better supervision of crypto markets. This regulatory recalibration occurring under the Trump administration's pro-crypto stance will lead to better oversight frameworks, giving room for innovation and financial stability.
EQUITY
The S&P 500 fell for a fourth consecutive day on Wednesday as investors rotated out of technology stocks into less expensive sectors, with the technology sector down 0.8%, while investors await Nvidia earnings. FOMC minutes revealed a cautious stance on rate cuts due to projected tariff-induced inflation, though bets on a cut next meeting are almost certain. In retail earnings, Target fell after naming a new CEO while maintaining lowered annual forecasts, while Estee Lauder's weak profit guidance dragged it down.
GOLD
Gold prices traded higher ahead of the Federal Reserve's Jackson Hole symposium with questions surrounding the Fed's independence. The latest FOMC minutes revealed a divided Fed, with most officials believing it's too early to cut rates. However, analysts note that gold has failed to rally significantly even with lower bond yields and a weaker dollar, with BMI revising its 2025 average price forecast upward to $3,250/oz.
OIL
Crude oil prices rallied on Wednesday, with WTI closing up 1.62% higher after U.S. crude inventories reported a 6.01 million barrel drawdown. BP's major Indiana refinery flood and geopolitical tensions surrounding Ukraine peace negotiations had also supported price. However, OPEC+ plans and Russia potentially receiving reduced sanctions limit its gain.
CURRENCY
The U.S. dollar remained relatively steady given President Trump's pressure on Governor Lisa Cook to resign over mortgage-related allegations. Markets are currently pricing in an 82% chance of a 25 basis point rate cut next month, though markets largely expected that it's already widely priced in. Jackson Hole's labour market theme and Powell's remarks became the main focus for monetary policy direction, as traders weigh whether the Fed will respond to recent weak employment data or maintain caution ahead of tariff-induced inflation.
