30/01/2025 - 08:43 UTCThe US dollar was almost unchanged against most major currencies on Wednesday, with the dollar index (USDX) up by a mere 0.05%, after the Federal Reserve left interest rates unchanged as widely expected.
The main US stock indices traded between gains and losses on Wednesday, ending the session moderately lower, following a decision by the Federal Reserve to keep interest rates steady, while adopting a hawkish stance, removing language from its December statement that inflation was making progress toward the 2% target. This shift has led traders to anticipate fewer rate cuts this year. For the remainder of the week, stock traders’ focus could shift to a string of earnings from big tech as well as key inflation numbers due on Friday.
In corporate news, Investors reacted to Microsoft's weaker-than-expected cloud growth forecast by sending shares down 4.5% in after-hours trading Wednesday. Concerns centered on heavy spending, the difficulty of realizing AI revenue, and the challenge from lower-cost Chinese AI. Tesla saw a volatile trading day, falling 2.3% before rebounding over 4% after hours, even with disappointing margins. Meta shares rose slightly, while Nvidia dropped 4%. The market now awaits Apple's earnings on Thursday.
European stocks rose are seeing some strong upwards momentum in the past weeks, with the Germany 40 rising by 0.67% on Wednesday and almost 9% up since the beginning of January. The positive sentiment was further boosted by positive US tech earnings following the Federal Reserve's decision to hold interest rates steady.
Attention now shifts to the ECB, which is expected to cut rates by a quarter of a percentage point despite recent Eurozone inflation increases. Investors will be watching Eurozone growth data, including Germany's Q2 GDP release, given the ECB's four rate cuts last year to stimulate growth.
Some price action could also be seen later in the day when the U.S. will publish its advanced GDP data, weekly jobless claims and pending home sales. For Friday the focus could turn to the release of the Core PCE price index and the Chicago PMI.
The EUR/USD currency pair dipped below 1.0400 on Wednesday before rebounding within the day’s initial trading range.
As widely anticipated, the Federal Reserve left interest rates unchanged on Wednesday. Fed Chair Jerome Powell reaffirmed the central bank’s data-driven approach, emphasizing that inflation is gradually moving toward target levels but not yet at a point warranting a policy shift.
Market attention now turns to the upcoming U.S. fourth-quarter Gross Domestic Product (GDP) report, set for release on Thursday.
On Friday, December’s Core Personal Consumption Expenditures Price Index (PCEPI), the Fed’s preferred inflation gauge, will be released.
Gold prices edged lower on Wednesday as the U.S. Federal Reserve (Fed) maintained its restrictive stance, signaling a preference for keeping interest rates unchanged. The Fed removed key inflation-related language from its statement, reinforcing expectations that policy easing remains distant.
Powell emphasized that monetary policy remains “less restrictive than it had been” but reiterated that the Fed sees no urgency to adjust rates. He noted that the Federal Open Market Committee (FOMC) is in a “wait-and-see” mode, closely monitoring fiscal and trade developments under the new administration.
Oil prices declined on Wednesday, with U.S. crude settling at its lowest level so far this year after domestic inventories rose more than expected.
Data from the Energy Information Administration (EIA) showed that U.S. crude inventories increased by 3.46 million barrels last week, exceeding analysts' expectations of a 3.19-million-barrel rise. The continued decline in refinery activity has put downward pressure on oil prices, as supply outpaces demand.
Investor sentiment was further rattled after the White House reaffirmed President Donald Trump’s plan to impose 25% tariffs on imports from Canada and Mexico starting February 1.
Looking ahead, market participants are closely watching the OPEC+ ministerial meeting on February 3, where discussions on increasing oil supply from April will take center stage.
The US 500 ended Wednesday’s session in the red as investors digested the Federal Reserve’s hawkish stance on interest rates while bracing for a series of earnings reports from major tech companies.
Following the Fed’s announcement, traders adjusted their rate cut expectations, pricing in fewer reductions for 2025.
Investors are now shifting their attention to a crucial round of earnings from some of the market’s biggest drivers.
Microsoft, Meta Platforms, and Tesla were set to report their quarterly results after Wednesday’s closing bell, with Apple scheduled to release earnings on Thursday.
Analysts expect AI development and investment to be a major theme in these earnings reports, particularly after Monday’s DeepSeek-driven market selloff. investors will be closely watching Big Tech earnings, economic data releases, and broader macroeconomic trends for further direction in the days ahead.
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