By the end of Wednesday, the Dow Jones Index (US30) rose by 0.57%. The S&P 500 Index (US500) declined by 0.10%. The Nasdaq (US100) Technology Index closed lower by 0.33%. US stocks closed mixed as investors weighed the Federal Reserve’s outlook following an expected 25-basis-point rate cut. The median FOMC prognosis suggests two more rate cuts this year, but strong growth, a low unemployment rate, and an upward revision of core inflation have raised doubts about the pace of easing in 2026. Chairman Powell also showed caution, refraining from expressing confidence in further rate cuts. The Fed expects to cut rates by another 50 basis points by the end of 2025 and by a quarter-point in 2026, which is slightly more than anticipated in June. GDP growth expectations were revised upward for 2025 (1.6% vs 1.4% in the Jun prognosis), 2026 (1.8% vs 1.6%), and 2027 (1.9% vs 1.8%). PCE inflation this year is projected at 3%, the same as in June, but expectations for 2026 were revised upward (2.6% vs 2.4%). The core PCE inflation expectations also remained at 3.1% for 2025 but were revised upward for 2026 to 2.6% from 2.4%. The unemployment rate is still expected to be 4.5% for 2025, but the projections for next year were revised downward to 4.4% from 4.5%. Meanwhile, technology stocks were under pressure, with shares of Avidia and Broadcom falling by 2.5% and 3.5% amid reports of Chinese restrictions on Nvidia chip purchases.
The Canadian dollar fell to 1.375 per US dollar after the Bank of Canada lowered its policy rate by 25 basis points to 2.5% and signaled that the easing campaign would continue. The move reflected a sharper-than-expected slowdown in activity, including a 1.6% contraction in Q2 GDP and a 27% drop in exports. The deteriorating labor market situation strengthened the case for policy easing: in August, net job losses and the unemployment rate rose to 7.1%, which reduced wage pressures and took the edge off inflation.
European stock markets were mostly lower on Wednesday. The German DAX (DE40) rose by 0.13%, the French CAC 40 (FR40) closed down 0.40%, the Spanish IBEX35 (ES35) declined by 0.24%, and the British FTSE 100 (UK100) closed positively at 0.14%. The Eurozone’s consumer price inflation for August 2025 was revised downward to 2.0% from a preliminary 2.1%, which is in line with the ECB’s target. Top gainers included Continental (+1.9%), Adidas (+1.7%), Bayer (+1.6%), and Infineon Technologies (+1.3%). In contrast, Commerzbank and Siemens Energy suffered the biggest losses, falling by 2.8% and 2.2%, respectively.
WTI crude oil prices fell to $64 per barrel on Wednesday. European officials reported plans to accelerate the reduction of Russian fossil fuel imports and called for more decisive measures to increase economic pressure on Moscow. Additionally, EIA data showed that US crude oil inventories fell by 9.3 million barrels last week, the largest drop in three months.
Asian markets traded mixed yesterday. The Japanese Nikkei 225 (JP225) fell by 0.25%, the Chinese FTSE China A50 (CHA50) rose by 0.63%, the Hong Kong Hang Seng (HK50) gained 1.78%, and the Australian ASX 200 (AU200) showed a negative result of 0.67%.
The Hong Kong Monetary Authority, following the US Fed, lowered borrowing costs to 4.5%, the lowest since November 2022. Chief Executive Eddie Yue stated that the move should support the real estate market and the broader economy.
The Bank of Indonesia unexpectedly cut its key interest rate by 25 basis points to 4.75% at its September 2025 policy meeting. Since last September, the Central Bank has lowered rates by 150 basis points, bringing the key rate to its lowest level since October 2022. Recent data showed that in Q2, GDP grew by 5.12% y/y, the fastest pace in two years, and annual inflation in August fell to 2.31%. Earlier this week, the government unveiled a stimulus package worth around $1 billion for Q4 to accelerate GDP growth.
The Australian dollar traded around $0.665 on Thursday. Data showed that net employment in August fell by 5,400 against projections of a 21,500 increase, driven by a sharp reduction of 40,900 full-time jobs. The unemployment rate remained stable at 4.2%. Despite the weak data, markets imply only a 20% chance of a rate cut by the Reserve Bank of Australia at its September 30 meeting, with expectations for November rising to 70% as inflation remains above target and policymakers show caution.
The New Zealand dollar fell to $0.592 after weaker-than-expected GDP data spurred bets on interest rate cuts. New Zealand’s economy contracted by 0.9%, worse than the expected contraction of 0.3%. Markets are now fully pricing in a quarter-point rate cut to 2.75% at the Reserve Bank’s October meeting, with a 24% chance of a more significant half-percent cut.
