SVET Reports
Wednesday's Markets Update (February 19, 2025)
On Wednesday, equities are up, with the Nasdaq and S&P making new ATHs, as housing starts decline sharply and despite new tariff threats and FOMC minutes showing the majority on a rate-cutting pause in view of tariffs. Japanese markets are down, keeping inside of their narrow 12-month-old side-range after the BoJ started its rate hike. Australian shares hit a one-month low on tariffs, with the jobless rate the highest in 3 months. The EU's, as well as Canadian, Brazilian, and Indian stock markets, are down as auto, chip, and drug stocks were pressured by Trump's new levies. The South African rand keeps depreciating on slow growth, high debts, and a budget deficit. Chinese equities are in the green on a continuing DeepSeek rally. Natural gas surged to a 5-year high on cold weather. Lumber keeps rising on tariffs. BTC, SOL, and ETH are in slight green but still in a bear trend. Other news: Microsoft introduced a quantum chip. State of the World Market: Mostly Down, suppressed by new tariffs, rising inflation and mounting debts.
Details
Housing starts dropped 9.8% MoM to an annualized 1.366M units in January, after a revised 16.1% surge in December. Historically, housing starts have averaged 0.31% since 1959, peaking at 29.3% in July 1982. 1Y trend: "Side" (Census)
Fed policymakers urged caution in adjusting monetary policy amid high uncertainty. Some favored maintaining restrictive rates if inflation stayed high, while others supported easing if growth slowed. Upside inflation risks were noted. Rates held at 4.25%-4.5%. 1Y trend: "Down" (Fed)
Crypto
Microsoft introduced Majorana 1, a quantum chip leveraging topological superconductivity, a unique state of matter. The chip uses a custom topoconductor to control Majorana particles, advancing quantum computing. It requires extreme cooling and precision. (source)
World Markets
China's FDI fell 13.4% YoY to CNY 98B in January 2025, marking the weakest start in four years. Declining foreign confidence, deflation risks, and opaque balance sheets persisted, though government support and tech sector easing boosted sentiment. 1Y trend: "Down" (CN
The People’s Bank of China held key lending rates steady for the fourth month in February, keeping the one-year LPR at 3.1% and the five-year LPR at 3.6%, both at record lows. The decision aligns with market expectations amid yuan pressure and trade tensions. Last week, the PBoC hinted at future policy adjustments to support the economy. 1Y trend: "Down" (PBC)
Currencies
The South African rand fell to an over two-week low of 18.6 per USD after Finance Minister Enoch Godongwana's budget speech was postponed, the first delay in three decades. Coalition divisions deepened as the Democratic Alliance opposed a VAT hike, complicating fiscal reforms amid economic challenges, which include slow growth and high debts, exacerbated by budget deficit which was caused by expanding social programs and support for state-owned enterprises. 1Y trend: "Side"
Commodities
Natural gas futures surged over 7% to $4.36/MMBtu, hitting a December 2022 high amid extreme cold boosting demand and disrupting output. Prices rose for seven days, the longest streak since July 2021, with a 29% weekly gain lifting gas producer stocks. The oil-to-gas ratio fell to 17-to-1, its lowest since December 2022, reflecting gas's strength. Analysts expect cold weather to sustain high demand through February 22. 1Y trend: "Side"
Lumber futures neared $620 per thousand board feet in February, the highest since October 2022, driven by tight supply and tariff concerns. North American production fell in 2024 due to sawmill closures, while tariff hikes on Canadian lumber risked price spikes (up to 40%). 1Y trend: "Up"