Markets steady as data weakness raises questions

David Morrison

SENIOR MARKET ANALYST

26 Mar 2025

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UK inflation came in lighter than expected, with CPI printing at 2.8% versus the 3% estimate. Sterling initially fell on the release but quickly stabilised, with the move remaining contained.

Most of the major US stock indices eked out modest gains on Tuesday, though the Russell 2000 drifted lower. A weak set of economic data, including disappointing housing figures and a particularly soft consumer confidence report, kept renewed positive sentiment contained. After hours, GameStop surged 7% after its board voted to invest company cash into Bitcoin, reviving memories of its meme-stock past.

Overnight, Asian Pacific stock indices were mostly higher, with decent gains across Hong Kong, Japan, and Australia. European stock indices were weaker across the board as investors prepare for the UK budget announcement, where the Chancellor is expected to unveil billions in spending cuts.

FX markets mixed as sterling softens

Currency markets were mixed overnight. Sterling came under selling pressure following the release of softer-than-expected inflation data, which raised hopes that the Bank of England will cut rates in May. The euro held steady, while the Japanese yen was mixed. The US Dollar Index continues to consolidate, having fallen sharply so far this year.

Gold holds firm, oil creeps higher, crypto gains

Gold edged higher in early morning trade, but it lacked strong upward momentum, and prices dropped back as Europe opened. Silver was little changed in early trade and appears to be consolidating after a notable jump yesterday.

Oil continued to push higher this morning, with front-month WTI holding above $69 per barrel. Support around $65 appears to be holding. Yesterday’s data showed a larger-than-expected draw in crude inventories. Today’s weekly inventory report is expected to show a 1.5-million-barrel build, so traders will be watching closely for further signals for the overall supply and demand dynamics.

Gas remained under pressure, slipping below $4, as mild weather and ample supply continued to weigh on prices.

Crypto markets were mixed and little-changed in early trade this morning. Bitcoin is eyeing the $90,000 level, while Ether continues to trade above $2,000. Both markets appear to be in a holding pattern as there’s little obvious upside momentum currently.

Volatility eases as Fed speakers take the stage

The VIX settled around 18, reflecting a steady risk environment as markets continue to digest recent data and central bank rhetoric. More Fed speakers are scheduled today, likely adding further colour to the policy outlook.

Key headlines & data to watch

  • Durable goods: The main data release for the US session.
  • US blacklists over 50 Chinese companies: The latest move to curb China’s AI chip capabilities.
  • CFOs and consumers expect a US recession: Sentiment surveys continue to highlight economic uncertainty.

Market outlook

US futures are flat in early trade as investors pause following a three-day winning streak. While equities, oil, and crypto appear to have stabilised and may have bottomed out, weak economic data remains a concern.

As expected, Trump remains unfazed by economic worries, continuing to pressure the Fed for rate cuts. Meanwhile, UK inflation data supports the case for a BOE cut in May, which now seems increasingly likely.

With equity markets, oil, and cryptos all moving in sync, traders should watch to see if this correlation holds—or if volatility returns to shake things up.


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