Global stock markets traded in mixed directions and the US dollar weakened on Wednesday as investors positioned for crucial American employment data and reassessed the Federal Reserve’s interest rate trajectory. The moves followed an unexpected flattening of US retail sales in December, which has heightened expectations for monetary policy easing.
US stock futures pointed to a cautiously optimistic open, with analysts noting that the soft retail figures provided the Fed with additional justification to consider a rate cut in March. “Hopes for a rate cut by the Fed next month have improved slightly after American retail sales unexpectedly flatlined in December,” said Derren Nathan, head of equity research at Hargreaves Lansdown. This follows the central bank’s decision to hold rates steady in January after three consecutive cuts.
The shift in rate expectations pressured the dollar, which fell against a basket of major currencies. Traders are now pricing in a higher probability of three quarter-point rate cuts in 2025, according to Bloomberg data, with two already reflected in current market prices.
European equity indices mostly declined, diverging from earlier gains in Asia. The mixed performance reflected ongoing caution as markets await the non-farm payrolls report, due later Wednesday, for further clues on the labour market’s strength and consumer health. The economic adviser to President Donald Trump had earlier warned of potential softness in upcoming data.
Corporate earnings and developments also drove individual stock movements. Heineken shares rose 2.1% after the Dutch brewer announced plans to cut 6,000 jobs due to falling beer volumes. TotalEnergies gained 1.8% despite a 17% drop in annual net profit, as the French company announced fresh share buybacks. Siemens Energy jumped 4.6% on the back of surging profits linked to electricity demand from artificial intelligence infrastructure.
Conversely, Dassault Systèmes tumbled over 19% after the French software firm reported lower-than-expected sales. In the US tech sector, concerns persisted about the return on massive investments in AI, amplified by Alphabet’s swift $30 billion debt issuance and news of a new tax-strategy tool from startup Altruist Corp that threatens traditional business models.
Oil prices climbed amid renewed geopolitical tensions in the Middle East, with Israeli Prime Minister Benjamin Netanyahu expected to press for a tougher US stance on nuclear negotiations with Iran. Brent crude rose 1.4% to $69.74 a barrel, while West Texas Intermediate gained 1.5% to $64.89.
At 1100 GMT, European markets showed the FTSE 100 up 0.5%, while the CAC 40 and DAX were both down 0.4%. Hong Kong’s Hang Seng and Shanghai Composite closed modestly higher. In currencies, the euro strengthened to $1.1925, the pound rose to $1.3706, and the dollar fell to 153.31 yen.
The upcoming US jobs report represents a critical inflection point. Stronger-than-expected figures could temper rate cut bets and support the dollar, while a weak print would likely reinforce the current dovish shift, adding volatility to global asset prices and currency markets in the near term.
