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OECD slashes growth outlook
Equities decline on renewed trade fears, soft US data, and trimmed OECD forecasts as investors brace for more policy uncertainty.
OECD downgrades global growth projections for the second time this year, citing trade barriers and policy uncertainty.
US stock futures retreat, led by the S&P 500 and Nasdaq, as economic data point to a broad-based slowdown.
Treasuries rise and the dollar strengthens, while gold slips and oil holds steady amid geopolitical and fiscal risks.
ECB rate cut priced in, after eurozone inflation dips below target, reinforcing dovish expectations.
Markets react to OECD downgrade and US economic cooling
U.S. equity futures fell on Wednesday following a sobering update from the OECD, which slashed its global growth forecast to 2.9% for both 2025 and 2026 — attributing the downgrade to rising protectionism and sustained geopolitical uncertainty. The S&P 500 futures dropped 0.4%, while Nasdaq 100 futures slipped 0.3%. Treasuries climbed, with 10-year yields dipping two basis points to 4.42%.
In foreign exchange markets, the dollar advanced 0.2%, benefiting from haven flows. The euro and pound both weakened by 0.3%, as investors absorbed soft eurozone inflation data and persistent trade tensions.
US economy shows signs of softening
Upcoming labor market reports are likely to underscore a broader slowdown. Job openings in April are expected to drop to the lowest levels since 2020, while Friday’s payrolls data could reveal a deceleration in hiring. These trends are prompting investors to reassess the resilience of the US consumer and corporate earnings trajectory.
ECB pivot likely as inflation falls below target
Euro-area inflation fell below the ECB’s 2% target, strengthening the case for further monetary easing. Markets are now fully pricing in a 25 bps rate cut at Thursday’s ECB meeting, with expectations building for at least one more reduction by year-end. The Stoxx Europe 600 pared earlier losses and closed down 0.2%, while the euro slipped to $1.1401.
Trump renews pressure on Fed; Section 899 fuels volatility
President Trump continues to push for rate cuts, summoning Fed Chair Jerome Powell for a rare White House meeting. While Powell emphasized the Fed’s independence and data-driven approach, Trump reiterated his view that maintaining high rates disadvantages the US against China.
The potential enactment of Section 899 — which would allow retaliatory taxes on foreign investments — added to investor anxiety. Allianz warned the dollar could weaken by 5% if the provision is fully implemented.
