The US Federal Reserve stuck to its script as it kept key interest rates unchanged, noting the growing risks of faster inflation and higher unemployment as it grapples with US President Donald Trump’s tariff regime.
Wall Street’s fortunes were mixed as investors let the central bank’s words settle, with the prospect of Apple introducing artificial intelligence options to its Safari search engine rattling Google-parent Alphabet, while Walt Disney surged after beating expectations and is eyeing up Abu Dhabi for a new theme park.
Novo Nordisk advanced after cooling some fears its weight-loss drugs were getting left behind by its rivals.
And ANZ Group Holdings is the latest of Australia’s Four Pillars to report earnings today, after some subdued results from Westpac Banking Corp and National Australia Bank so far this week.
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The yield on 10-year US Treasuries fell 4 basis points to 4.27% after the Fed kept its federal funds rate in a range of 4.25%-to-4.5% as expected, with chair Jerome Powell noting the central bank is having to balance risks to inflation and the labour market as it navigates the new global trading environment. Investors still predict the world’s biggest central bank will cut its key rate three times this year.
“The US Federal Reserve left rates on hold for a third straight meeting, which was unanimously expected by economists, as FOMC (Federal Open Market Committee) officials continue to wait for more clarity on the outlook for the labour market and inflation,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “In the accompanying statement, the Fed noted that uncertainty about the outlook has ‘increased further’ and indicated that the risks of higher unemployment and inflation have risen.”
The kiwi dollar fell to 59.62 US cents at 7am in Auckland from 60.01 cents yesterday.
House of Mouse
Meanwhile, stocks on Wall Street were mixed, with the Dow Jones Industrial Average climbing 0.8% in late trading, with Disney surging 11% after beating earnings expectations. The media conglomerate’s theme park division was the big driver, soothing fears Trump’s tariff war might dent the group’s outlook, and Disney plans to open a new park in Abu Dhabi.
The tech-heavy Nasdaq Composite declined 0.1% as Alphabet slumped 8.1% amid reports Apple is considering introducing AI search options to its Safari browser. The Google parent’s dominance in online search is under the regulatory microscope in an antitrust case seeking to break up the group’s monopoly.
Stocks in Europe were broadly weaker with the UK’s FTSE 100 index falling 0.4% and Germany’s DAX 30 down 0.6%.
Still, Denmark’s Novo Nordisk advanced after reporting better-than-expected first-quarter earnings, and in spite of its lowered annual guidance. The Ozempic maker has come under increased pressure from copycat versions of its semaglutide diabetes and weight-loss drugs, while Trump’s plans to impose tariffs on pharmaceuticals has investors questioning the firm's position in the US market.
Locally, Australian futures are pointing to a 0.1% increase for the S&P/ASX 200 index, with ANZ poised to report its first-half earnings.
Reporting by Paul McBeth. Image from Héctor Vásquez on Unsplash.
