Stocks on Wall Street unwound earlier gains after the US Federal Reserve chair Jerome Powell remained coy on whether a rate cut is coming after keeping the key rate unchanged at today’s review, although there were two dissenting voices in that decision.
Meanwhile, investors await earnings from Meta Platforms and Microsoft – as well as Qualcomm and Ford – as European exporters Porsche, Adidas and Aston Martin flagged likely price hikes from the looming US tariff regime.
The kiwi dollar dropped to a three-week low with the greenback rallying on stronger-than-expected US economic growth, while President Donald Trump said he won’t extend deadlines for higher tariffs for countries that haven’t secured deals such as Canada, Mexico and South Korea.
Meanwhile, the Bank of Japan’s upcoming policy meeting is on the radar, with the heightened political uncertainty seen giving the monetary authority some cover in continuing to stay put.
Still waiting, still seeing
Stocks on Wall Street reversed earlier gains, with the S&P 500 down 0.4% in late trading, after US Fed chair Jerome Powell said the federal open market committee still hasn’t made a decision on whether to move in September after keeping the federal funds rate in a range of 4.25% and 4.5% at today’s meeting.
Governors Michelle Bowman and Christopher Waller – both appointed by President Donald Trump – dissented at the latest review, the first time there had been two voting against the majority since 1993.
“This plays to fears that the Fed has become increasingly politicised and is losing its independence,” Bank of New Zealand senior markets strategist Jason Wong said in note.
The kiwi dollar fell as low as 58.89 US cents, trading at 58.96 cents at 7am in Auckland from 59.59 cents yesterday, with the greenback rallying ahead of the Fed decision when US data showed the world’s biggest economy grew at a 3% annual pace in the June quarter, recovering from a contraction at the start of the year.
The data prompted Trump to renew his calls for lower interest rates, while also ruling out another extension to the Aug 1 deadline for his tariff regime to come into effect. Some copper products are the latest to face tariffs, with the White House declaring a 50% levy on semi-finished copper products and copper-intensive derivative products from August.
Pass the parcel
The upcoming US import levies weighed on some European companies that reported overnight, with apparel maker Adidas and automakers Porchse and Aston Martin signalling potential price hikes in response to the regime.
Stocks in Europe were mixed with declines among auto firms including Porsche, Aston Martin and Mercedes-Benz, while Swiss bank UBS rallied on a better expected result and HSBC declined after missing analysts’ estimates.
Meanwhile, investors are awaiting earnings from two of the Magnificent 7 megastocks after the bell, with Meta and Microsoft poised to report. Qualcomm and Ford Motor Co are also due after trading ends, while Amazon and Apple are scheduled for Thursday in the US.
Oil futures continued to nudge higher with the tougher US stance on Russia over its war in Ukraine. Brent crude oil futures were up 0.1% at US$72.55 a barrel. Exxon-Mobil and Chevron are due to report on Friday.
The reversal in Wall Street’s fortunes isn’t seen flowing through to the antipodes yet, with Australian futures pointing to a flat open for the S&P/ASX 200 index.
The Bank of Japan’s upcoming policy meeting is on the radar today, with the central bank seen staying on hold, while Chinese manufacturing data and Australian retail sales are also in view.
No local data is scheduled for today, while Green Cross Health is holding its annual meeting virtually today.
Reporting by Paul McBeth. Image from Adam Śmigielski on Unsplash.
