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The Bank of England and the Bank of Japan kept their interest rates unchanged yesterday, capping off a year of easing with a cautious stance for 2025. Despite the US Federal Reserve and the European Central Bank’s (ECB) recent rate cuts, central bankers are signalling that inflation continues to prove stickier than expected, pointing to potentially slower easing cycles next year, and triggering sell-offs across stock markets.
THE BANK OF ENGLAND-
The Bank of England (BoE) kept its interest rate unchanged at 4.75% as it looks to “squeeze” remaining inflationary pressures and reach the 2% target, according to a BoE statement. Inflation in the UK hit an eight-month high in November, according to AP. “With the heightened uncertainty in the economy, we can’t commit to when or by how much we will cut rates in the coming year,” Reuters quotes BoE governor Andrew Bailey as saying, striking a cautious tone. The BoE decision was followed by a 1.1% drop in the FTSE 100 index.
BANK OF JAPAN-
Japan also wants to weigh upcoming risks: The Bank of Japan (BOJ) kept interest rates steady at 0.25% as it bides its time on risks overseas and the wage outlook next year, according to statements from BoJ governor Kazuo Ueda picked up by Reuters. “Underlying inflation is heightening but at a moderate pace. That is allowing us to go slow in raising rates,” Ueda said.
PEOPLE’S BANK OF CHINA-
The People’s Bank of China (PBOC) kept its main benchmark lending rates unchanged this morning, in line with economists’ expectations, CNBC reports. China’s leadership indicated a shift towards more aggressive economic support in 2025, which is expected to include interest rate cuts and a widening of the 3% fiscal deficit.
MORE FALLOUT FROM FED’S CUT-
US stocks ended the day flat despite an earlier bounce from a widespread sell-off earlier on Wednesday, with the Nasdaq and the S&P 500 both down a marginal 0.1%.
The yield on US 10-year Treasuries also hit its highest level since May at 4.59%, jumping 0.2 percentage points in the past two days, the Financial Times reports.
MARKETS THIS MORNING-
Asian markets are mixed following the interest rate decisions from China and Japan, with the Nikkei up 0.5% and China’s CSI down 0.2%. Meanwhile, Wall Street futures signal a lower open on news of a potential government shutdown this weekend.
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ADX |
9,273 |
-0.2% (YTD: -3.2%) |
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DFM |
5,047 |
+0.2% (YTD: +24.3%) |
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Nasdaq Dubai UAE20 |
4,109 |
+0.3% (YTD: 6.9%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
4.4% o/n |
4.4% 1 yr |
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TASI |
11,892 |
-0.6% (YTD: -0.6%) |
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EGX30 |
30,527 |
+0.1% (YTD: +23.6%) |
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S&P 500 |
5,867 |
-0.1% (YTD: +23.0%) |
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FTSE 100 |
8,105 |
-1.1% (YTD: +4.8%) |
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Euro Stoxx 50 |
4,879 |
-1.6% (YTD: +7.9%) |
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Brent crude |
USD 72.65 |
-1.0% |
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Natural gas (Nymex) |
USD 3.63 |
+7.4% |
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Gold |
USD 2,611.3 |
-1.6% |
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BTC |
USD 97,648 |
-2.6% (YTD: 131%) |
THE CLOSING BELL-
The ADX fell 0.2% yesterday on turnover of AED 918.2 mn. The index is down 3.2% YTD.
In the green: Julphar (+6.6%), Bildco (+5.0%) and RAK for White Cement and Construction Materials (+3.5%).
In the red: Commercial Bank International (-10.0%), Mair Group (-8.2%) and Sharjah Cement and Industrial Development (-7.4%).
Over on the DFM, the index closed up 0.2% on turnover of AED 771 mn. Meanwhile, Nasdaq Dubai rose 0.3%.
