The Fed’s rate cut did not come without downside, as the Chair Jerome Powell indicated it now forecasts less than two total rate cuts to occur in 2025. While late-afternoon trading on Wednesday signalled strong distate from the market, on Thursday, Wall Street ticked modestly upwards. European stocks took a steep fall, following Wall Street's lead on Wednesday.
After late Wednesday afternoon's post-Fed meeting sell-off, the Dow, Nasdaq, and the S&P 500 all rose +0.4% on Thursday. However, investors traded particularly cautiously, with volumes light as the implications of a slower-than-anticipated rate cutting cycle was contemplated. Megacaps Nvidia and Amazon.com added +3.2% and +2.1% respectively, gaining back some ground. Micron plunged -15.5% after it released its forecast of quarterly revenue and profit below market estimates. In treasury notes, the US 2-year treasury bond yield fell -3 bps to 4.323%, while its 10-year counterpart leapt +9 bps to 4.592%, reflecting investors revising their rate-cutting expectations.
European stocks took negative cues from the Fed’s rate cut decision as benchmarks took steep drops overnight. The pan-European Stoxx 600 fell -1.5% while the UK’s FTSE 100 plunged -1.1%. The Bank of England, as widely expected, also hit pause on cutting its policy rate — citing stubborn inflation as the reason it cannot cut rates too rapidly. SoftwareOne skyrocketed +7.0% after it announced its purchase of Crayon Group Holding. Stellantis sunk -1.6% after it reported a fall in sales last month. Renault jumped +1.2% after reports emerged that Foxconn is in talks with the carmaker regarding the possibility to sell its stake in the Japanese automaker.
The ASX 200 plunged -1.7% after the Fed’s decision to reduce the number of rate cuts in 2025 by half. Woodside Energy sunk -1.9% after it agreed to an asset swap with Chevron that freed up US$400m in cash. Transurban added +0.1% after it reaffirmed its FY25 distribution guidance. Across the ditch, the NZX 50 also tanked -0.9%. In Asia, China’s CSI 300 was the only benchmark in the green, inching +0.1% upward. Korea’s Kospi led losses, falling -2.0%, followed by the Nikkei 225 with -0.7%. Hong Kong’s Hang Seng dropped -0.6%, and the Shanghai Composite cut -0.4%.