Technology Stocks Under Pressure and Lots of Fresh Central Bank News to Absorb – Currency Thoughts
Technology Stocks Under Pressure and Lots of Fresh Central Bank News to Absorb
August 20, 2025
In less than 45 minutes after today’s opening bell on Wall Street, the Nasdaq’s loss yesterday had been extended by another 1.6%, and the S&P 500 and Russell 200o were each 0.8% weaker. The dollar had depreciated 0.5% against the yen, 0.3% versus the Swiss franc and 0.1% relative to the euro but also had strengthened 1.2% against the New Zealand dollar and 0.4% versus the South Korean won and Australian dollar.
European and Asian stock markets were mixed. Share prices closed down 1.5% in Japan and plunged 3.0% in Taiwan but rose 1.0% in China and 1.6% in Indonesia. New Zealand’s stock market jumped 1.1%. In Europe, French and British equities were up, while the German, Italian and Spanish Bourses were marginally lower.
Selling pressure on Bitcoin paused around $113,000, a 6-week low. Prices for gold and oil are up 0.8% apiece. Investor risk aversion was reflected in the declines of 10-year sovereign debt yields, amounting to six basis points today in the British Gilt, three bps in the case of Germany, Spain and Italy and two basis points in the United States and France.
More times than not these days, flurries of risk aversion have correlated with actions by President Trump to smear the Federal Reserve’s image of independence from political interference. On Social Media, Trump demanded Governor Cook must resign now!!, seizing upon reports that Governor Cook may have misreported some information on applications for personal property loans. Four of the seven Fed Governors already are Trump appointees, and if Cook were to leave the number would climb to five appointees by him.
Investor attention had already turned to central banks this week due to the annual Jackson Hole monetary policy symposium that begins on Thursday and the release later today of minutes from the last FOMC meeting. The theme of this year’s Jackson Hole event is “Labor markets in transition,” and it will be the scene of Fed Chairman Powell’s final address this event.
No fewer than seven monetary authorities around the world have announced interest rate decisions in the last 24 hours.
The 1-year and 5-year Loan Prime Rates of the People’s Bank of China were kept at 3.0% and 3.5% as had been anticipated. There most recent change was a reduction of 10 basis points at the monthly fixing in May and before that a cut in each rate of 25 basis points made last October. Chinese CPI inflation has been below 1.0% and occasionally in sub-zero territory since March 2023.
Officials at Bank Indonesia sprung a surprise on market participants at today’s scheduled monetary policy review. No interest rate change had been predicted in light of a higher 2.5% inflation rate last month, but instead the policy rate got cut 25 basis points further to 5.0%. The decision, according to a released statement, “is consistent with the persistently low inflation forecast for 2025 and 2026 within the target range of 2.5±1%, the maintained stability of the Rupiah exchange rate, and the need to stimulate economic growth in line with the economy’s capacity.” The interest rate had crested last year at 6.25% from April until September. Officials are hoping to implement additional reductions at future meetings.
The Reserve Bank of New Zealand’s Official Cash Rate was also sliced by 25 basis points. At 3.0% the new rate level constitutes a 36-month low and a drop from 5.25% that existed from May 2023 until an initial easing in August 2024. There have been 7 cuts altogether so far. A released statement stressed the dispersion of opinions among policy makers and uncertainty over future inflationary pressure. Three policy options were discussed: holding the rate as is and cuts of both 25 basis points and even 50 bps. The vote ultimately was between cutting by 25 or 50 bps, and the 4-2 decision favored the smaller move. “Recent increases in food prices and administered prices have contributed to near-term inflationary pressure.” But “if medium-term inflation pressures continue to ease as expected, there is scope to lower the OCR further.”
A 25-basis point interest rate cut occurred in Uruguay as well. The new rate at that central bank becomes 8.75% and is the second such move in seven weeks. The peak of 11.5% was maintained comparatively briefly from December 2022 until April 2023.
In leaving the Swedish Riksbank’s policy interest rate unchanged at 2.0%, officials acknowledged a recent rise of core inflation above the 2% target to 3.0%. According to a statement explaining today’s decision, “Although developments in inflation and economic activity during the summer have deviated somewhat from the forecast in June, the Executive Board assesses that the outlook remains largely the same. There is thus still some probability of a further interest rate cut this year, in line with the June forecast.”
The Central Bank of Iceland’s seven-day term deposit rate was also not changed. By a unanimous vote, such was maintained at 7.5%. Reductions totaling 175 basis points were made between October 2024 and this past May. “Although inflation has eased and inflation expectations have fallen in the recent term, inflationary pressures remain. The conditions that would enable an easing of the real interest rate have therefore not yet emerged. Further interest rate cuts will depend on whether inflation moves closer to the Bank’s 2½% target.” CPI inflation was at 4.0% last month, while the target is 2.5%.
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