British FTSE 100 hits new record. AUD emerges as G10 currency favorite

The US stock market demonstrated steady growth on Wednesday. By the close of trading, the Dow Jones (US30) rose by 0.76%, the S&P 500 (US500) gained 0.77%, and the technology-heavy Nasdaq (US100) finished 1.09% higher. The highlight of the day was the Nvidia earnings report, which exceeded expectations for both profit and revenue. This served as a vital signal for investors: the “AI bubble,” much discussed in recent weeks, has not burst, and real demand for chips remains consistently high.

Equity markets in Europe surged on Wednesday. The German DAX (DE40) rose by 0.76%, the French CAC 40 (FR40) closed up 0.47%, and the Spanish IBEX 35 (ES35) climbed 1.49%. The British FTSE 100 (UK100) gained 1.18%, reaching a new all-time high. The primary driver of the rally was the banking sector, led by HSBC, whose shares skyrocketed 7.6% following a strong financial report. The commodities sector also significantly contributed to the index’s growth amid rising prices for copper and metals.

Banking analysts predict stability for the Swiss franc (CHF) in the short term, viewing it as the ultimate safe-haven asset amid trade wars and geopolitical chaos. Switzerland’s strong fiscal indicators and current account surplus make the franc resilient to market shocks. However, this strength poses serious challenges for the domestic economy. Inflation in Switzerland sits at a critically low level (0.1%), effectively signaling a risk of deflation. Consequently, the SNB may either move to cut rates into negative territory or, more likely, conduct currency interventions by selling the franc to curb its exchange rate.

On Wednesday, silver prices (XAG) jumped more than 3%, closely approaching the psychological mark of $90 per ounce. The growth was driven by a confluence of factors: the implementation of the US 10% tariff, threats to raise it to 15%, and preparations for the decisive round of nuclear negotiations in Geneva. Investors returned to silver as a hedge against trade war risks and potential escalation in the Middle East.

Platinum prices (XPT) are trading above $2,300 per ounce on Thursday, hitting a four-week high. The precious metals market remains on edge due to large-scale US sanctions against 30 Iranian entities and the largest US military buildup in the Persian Gulf since 2003. Investors are utilizing platinum as a defensive asset ahead of the crucial Geneva talks, fearing that a diplomatic failure could lead to direct military conflict. Fundamentally, platinum is supported by the “substitution effect” for palladium and a chronic supply deficit from South Africa.

WTI oil prices accelerated their decline on Wednesday, dropping to $65.35 per barrel. The primary bearish factor was the EIA report, which recorded a shocking increase in crude oil inventories of 15.99 million barrels for the week. This is the largest build in three years, exceeding analyst expectations tenfold and neutralizing concerns regarding a supply deficit.

Asian markets traded with mixed results yesterday. The Japanese Nikkei 225 (JP225) surged by 2.20%, the Chinese FTSE China A50 (CHA50) rose by 0.65%, and the Hong Kong Hang Seng (HK50) gained 0.66%. The Australian ASX 200 (AU200) posted a positive result of 1.17%.

On Thursday, the Australian dollar (AUD) made a powerful move to 0.713 USD, reaching its highest levels since August 2022. Markets are nearly certain of an RBA rate hike to 4.10% (with an 80% probability for a May move) after January inflation figures unpleasantly surprised the regulator. The “aussie” currently looks like the favorite among G10 currencies as Australian government bond yields are rising faster than their US counterparts.

The New Zealand dollar (NZD) climbed above the 0.60 USD mark on Thursday, marking its third consecutive session of gains. The primary driver of the “kiwi’s” strength was a localized weakening of the US dollar: investors began to doubt the sustainability of Trump’s trade strategy after the Supreme Court blocked some of his initiatives, prompting temporary profit-taking on long USD positions. Nevertheless, the upside potential for the NZD is limited by the RBNZ’s dovish stance. Governor Anna Breman has signaled that the economy can recover without overheating, depriving the RBNZ of incentives to hike rates in the near future.