(Jan 29) : US stocks and Treasuries were broadly stable after the Federal Reserve held rates as expected, while a slew of mega-cap tech results were mixed. The dollar pared its recent slump as the yen weakened.
Equity index futures for Japan and Australia were flat, while those for Hong Kong fell. The S&P 500 ended Wednesday little changed, while the Nasdaq 100 rose 0.3%. Those moves failed to capture after-market gains for Tesla Inc and Meta Platforms Inc as investors responded favourably to earnings reports. Shares in Microsoft Corp dropped in post-market trade in a potential sign of unease with its spending.
The dollar rose Wednesday as Treasury Secretary Scott Bessent touted a strong currency, dousing speculation the US would help support the yen, which fell to around 153 per dollar. The yield on 10-year Treasuries was little changed at 4.24%.
The moves across asset classes signaled healthy sentiment as investors balanced a broadly supportive monetary policy with robust earnings and geopolitical uncertainty.
Fed Chair Jerome Powell refrained from signaling any imminent resumption of rate cuts amid a solid economy. Powell talked up a “clear improvement” in what’s expected for the economy in the year ahead. He said the labor market has shown signs of stabilizing, but added, “I wouldn’t go too far with that,” noting there were also signs of cooling. He demurred when asked what it may take for the committee to cut again.
“The Fed song remains the same — lower interest rates may be coming, but investors will have to remain patient,” said Ellen Zentner at Morgan Stanley Wealth Management. “With signs of stabilization in the labor market and inflation holding steady, the Fed is in position to play the wait-and-see game.”
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Elsewhere, President Trump’s pick to chair the Fed could be announced “in the next week or so,” Bessent said in an interview with Yahoo Finance.
In commodities, precious metals gained further ground, sending gold to a new high of almost $5,400 per ounce. Oil rose to a fresh four-month high Wednesday after Trump threatened another attack on Iran, urging Tehran to negotiate a nuclear deal.
Investors in Asia will be on the lookout for data Thursday including business confidence in New Zealand, economic growth in the Philippines and exports in Australia.
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The Federal Open Market Committee voted 10-2 to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented in favor of a quarter-point reduction.
Just two dissents underscored how tight the consensus is, which means any new Fed Chair that comes in after Powell’s term is up will have a hard time convincing other officials that rates need to go much lower, according to Sonu Varghese at Carson Group.
“The message: the Fed is comfortable on pause at 3.5% to 3.75% and could stay there for a while as it looks to confirm that the labor market is in the process of stabilizing, police the tariff-driven inflation peak still to come and assess the impact of fiscal stimulus from coming tax refunds,” said Krishna Guha at Evercore.
In emerging markets, currencies and equities clocked in a fifth session of gains with an EM stock index rallying 1.8% on Wednesday, powered by Asian chip-makers.
uploaded by Isabelle Francis
