Global markets respond to Fed decision as trade talks loom

​​​US markets climb on Fed caution and earnings strength

​US equity markets posted modest gains Wednesday, with the S&P 500 advancing 0.4%, the Dow Jones climbing 0.7%, and the Nasdaq 100 rising 0.3%. These gains came after the Federal Reserve (Fed) maintained current interest rates.

​Fed Chairman Powell's cautious tone reassured investors that policymakers recognise growth risks while monitoring inflation. This data-dependent approach comforted markets that had feared more aggressive tightening.

Walt Disney's better-than-expected results, particularly strong streaming numbers, helped drive positive sentiment. The entertainment giant's performance lifted shares in after-hours trading despite weaker theatrical results.

​Approximately 75% of S&P 500 companies have beaten earnings forecasts, though revenue beats remain less consistent. This suggests companies are managing costs effectively despite economic headwinds.

​Fed maintains rates as stagflation concerns emerge

​The Fed kept its benchmark interest rate between 4.25% and 4.5%, aligning with expectations. Powell emphasised the bank doesn't feel pressured to adjust policy in either direction.

​The Fed expressed growing concern about stagflation risks – slowing economic growth coupled with elevated inflation. This difficult balance has become more challenging with restrictive trade policies and weakening global demand.

​Markets interpreted the decision as slightly dovish, boosting risk sentiment despite no signals of immediate rate cuts. Future decisions remain dependent on economic indicators rather than following a predetermined path.

​The central bank's measured approach acknowledges both inflation risks and economic challenges, maintaining flexibility to respond to changing conditions.

​Corporate earnings show resilience amid challenges

​Walt Disney emerged as a standout performer, exceeding expectations with strong streaming growth. Disney+ reported increased revenue per user and lower churn rates, offsetting weakness elsewhere.

​Uber Technologies reported a narrower-than-expected loss but missed revenue targets due to higher driver incentives and operational costs. These results highlight ongoing pressures facing consumer-focused tech companies.

​Energy companies including Occidental Petroleum and Devon Energy posted earnings declines reflecting lower crude prices. However, both exceeded analyst expectations through effective cost control and capital discipline.

​Signs of margin pressure and demand softness are beginning to emerge despite earnings beats. This suggests greater challenges ahead if consumer spending weakens further.

​Asian markets follow Wall Street higher

​Asian markets opened positively Thursday, following Wall Street's lead. Japan's Nikkei 225 rose 1.04%, led by gains in technology stocks including SoftBank and Sony.

​The Hang Seng climbed 0.70%, supported by financial and property shares. Investors speculated Chinese authorities might loosen lending restrictions to support growth.

​Regional sentiment benefited from the Fed's steady stance, removing concerns about emerging market capital flows. However, gains were limited by geopolitical tensions and uncertainty around upcoming US-China trade negotiations.

​Bank of England poised for rate cut

​The Bank of England (BoE) is expected to cut its benchmark rate by 25 basis points to 4.25% today. This would mark the fourth reduction since August 2024, reflecting the response to economic pressures and subdued growth.

​The Monetary Policy Committee will likely vote 8-1 for the cut, with the accompanying report expected to include downward revisions to growth and inflation forecasts.

​Analysts predict the MPC may continue its easing cycle toward 3.5% by year-end. This gradual approach reflects the balance between addressing economic challenges while keeping inflation contained.

​UK-US trade framework announcement expected

​President Trump is expected to announce a framework for a new UK-US trade agreement today. Discussions have focused on reducing British tariffs on US cars, agricultural products, and technology.