Morning wrap (08.05.2025)

Wall Street closed yesterday's session in the green despite Jerome Powell’s mundane tone at the post-FOMC press conference (DJIA: +0.7%, S&P500: +0.4%, Nasdaq: +0.3%, Russell 2000: +0.3%).

The Fed kept U.S. interest rates unchanged, as expected (4.25–4.50%). The Fed's stance remained the same – “we don’t need to hurry, and the cost of waiting remains low,” Powell reiterated yesterday. The Fed Chair emphasized the solid state of the U.S. economy and the uncertainty about future policy direction, as there are scenarios where cuts will come this year, and others where they won’t.

The Trump administration announced plans to rescind and modify export restrictions on advanced chips that were introduced last year by the Biden administration. The policy was intended to divide countries into three strategic categories based on the level of restrictions. The Philadelphia Semiconductor Index rebounded on the news, gaining 1.7% yesterday.

Overnight, Trump announced that today a press conference would be held concerning “a major trade deal with representatives of a big and highly respected country.”

The announcement sparked broad optimism across the Asia-Pacific region. Gains were seen in Japan’s Nikkei 225 (+0.47%), Shanghai SE Composite (+0.12%), China’s HSCEI (+0.76%), Australia’s S&P/ASX 200 (+0.2%), and South Korea’s Kospi (+0.4%). The rally was led by semiconductor firms in Japan, South Korea, and Vietnam, while the sector declined in China.

In March, Bank of Japan members were divided on the timing of the next interest rate hike due to rising uncertainty related to U.S. tariff policies, according to minutes from the latest meeting. Some favored caution, others pushed for decisive action. The BOJ left rates unchanged, and Governor Ueda signaled a delay in further hikes.

On the forex market, G10 currencies are trading within relatively narrow ranges. The U.S. dollar is gaining (USDIDX: +0.26%), supported by the Fed’s calm stance and the anticipated trade deal, along with Antipodean currencies (AUDUSD, NZDUSD: +0.25%). The British pound (GBPUSD: +0.2%) is also extending gains on speculation that today’s trade deal may involve the UK. EURUSD is flat (1.13), while the Japanese yen is down 0.15% following the BOJ minutes.

Gold is trading flat at $3,363 per ounce, silver is up 0.6% to $32.65 per ounce.

Cryptocurrencies are showing optimism: Bitcoin is up 2% to 98,760 USD, while Ethereum is rebounding by 5.5% to 1,897 USD. Euphoric gains are also being recorded in contracts for the Trump token (+10.8%), CurveDAO (+8.2%), Chainlink (+6.1%), and Polygon (+4%).