Australian dollar falls amid soft inflation data. Natural gas prices fell to a 3-week low

The Dow Jones Index (US30) was up 0.31% on Tuesday. The S&P 500 Index (US500) added 0.92%. The Nasdaq Technology Index (US100) jumped 1.59%. The US stocks rose by 1.5%, led by the Nasdaq Index, as technology stocks recovered from Monday’s selloff. Nvidia rose by 8.8%, recovering some of the historic 17% loss in a single session that wiped out a market value of $593 billion. Broadcom and Oracle added 2.6% and 3.6%, respectively, amid general strength in the technology sector. Meanwhile, Royal Caribbean soared 11.9% on optimistic earnings estimates and General Motors fell 8.9% due to earnings concerns and potential US tariffs on imports of microchips, pharmaceuticals and steel.

The FOMC will meet today for its monetary policy meeting. Markets expect the FOMC to keep the target range for the federal funds rate unchanged at 4.25-4.50% when the 2-day FOMC meeting concludes on Wednesday. However, markets will gauge the Fed’s views on growth and inflation in Fed Chair Powell’s comments after the meeting.

Equity markets in Europe traded flat yesterday. The German DAX (DE40) rose by 0.70%, the French CAC 40 (FR40) closed down 0.12%, the Spanish IBEX 35 (ES35) added 1.31%, and the British FTSE 100 (UK100) closed positive 0.35%. The DAX hit a new record high on Tuesday, following yesterday’s losses due to concerns over the high valuations of some companies and the prospects for the growth of artificial intelligence.

WTI crude oil prices are hovering around $73 a barrel, remaining near a two-week low, as traders’ attention turned to President Donald Trump’s wide-ranging set of tariffs. Trump has said he will soon impose tariffs on foreign-made goods such as steel, aluminum and copper, raising concerns about the potential impact on global demand for commodities. In addition, Treasury Secretary Scott Bessent reportedly supports the gradual imposition of universal tariffs on US imports, starting at 2.5%.

The US natural gas (XNG/USD) prices fell below $3.6/MMBtu, nearly to a three-week low, due to warmer-than-expected weather projections for early February. However, analysts still expect 317 Bcf of gas to be withdrawn in the week ended January 24, which could eliminate a gas inventory glut for the first time since early 2022 and boost gas prices. Meanwhile, LNG exports are rising, helped by the restart of Texas-based Freeport LNG.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 1.39%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading due to holidays, and Australia’s ASX 200 (AU200) was negative 0.12%.

The Australian dollar fell below USD 0.625 on Wednesday, posting a third straight session of losses as weaker-than-expected domestic inflation data fueled expectations of an interest rate cut by the Reserve Bank of Australia (RBA) in February. The data showed Australia’s annual inflation rate slowed to 2.4% in Q4, down from 2.8% in Q3 and below the prognosis of 2.5%. The quarterly figure was also below expectations at 0.2%. Markets are now pricing in an 80% chance that the RBA will cut its monetary rate by 25 basis points to 4.35% at its February 18 meeting. The Australian dollar also faced downward pressure due to escalating tariff threats from US President Donald Trump and ongoing economic problems in China, Australia’s main trading partner.