Wall Street stocks, dollar steady ahead of tech earnings, Fed meeting
LONDON/BOSTON- World markets were suddenly looking calmer on Wednesday as the week’s rollercoaster ride for stock markets turned into wait-and-see ahead of the Federal Reserve’s first rate meeting of the year and results from Microsoft Meta and Tesla.
The Fed is widely expected to end a three-meeting run of rate cuts later and stay on hold, but investors will be eager to get a sense of just what it makes of new U.S. President Donald Trump’s eventful first nine days back in charge.
There was plenty to be getting on with before that though.
European shares climbed to a record high as strong results from Dutch chip equipment maker ASML sent its stock soaring 8% and hoisted the wider tech sector up 3.4%.
The parts of Asia that were not on Lunar New Year holidays had gained overnight too and Wall Street’s three main indices were muted ahead of the trio of “Magnificent 7” earnings. .
Investors seemed to have papered over the global rout suffered on Monday when the emergence of lower-cost Chinese AI model, DeepSeek, wiped more than half a trillion dollars off Nvidia’s value alone.
More than half of that has now been recouped though and with the Fed also looming on the horizon, currency and bond markets were mostly in a holding pattern.
The 10-year U.S. Treasury yield was at 4.52%, 3 bps lower on the day. European yields dipped with the ECB expected to cut its rates again on Thursday, while the yen nudged higher to 155.34 per dollar after Bank of Japan meeting minutes pointed to more rate hikes there. /FRX
State Street’s head of global macro strategy, Michael Metcalfe, said that after all the recent market dramas, Wednesday was in theory going to have some much-needed predictability.
“Today is one day of certainty in that we know the Fed won’t move rates,” he said.
Despite the noise around Trump trade tariffs, State Street expects Fed chief Jerome Powell to maintain the message that rates are likely to keep falling, while the return of calm in stock markets was also a positive.
Two days in and it doesn’t look like there is broader contagion,” Metcalfe said.
BIG TECH EARNINGS
Attention is now on the mega-cap tech earnings due from Facebook owner Meta, Microsoft and Tesla after the closing bell on Wednesday.
“While questions remain unanswered, the market is voting that the innovation that DeepSeek could bring to the ecosystem will unlikely impact the AI capex cycle and could even lead to new channel of demand for GPUs (graphics processing units),” Pepperstone strategist Chris Weston said.
Meta CEO Mark Zuckerberg said on Friday that the company plans to spend as much as $65 billion this year to expand its AI infrastructure, putting costs above Wall Street estimates. Microsoft’s quarterly revenue forecast will show whether billion-dollar bets on AI are propelling increased growth.
And Tesla investors will look for more details on the automaker’s lower-priced model as some expect the cheaper car to help the company hit its goal to increase deliveries by up to 30% this year.
Traders were also digesting Trump’s latest tariff threats.
The White House said he still planned to hit Mexico and Canada with steep tariffs on Saturday and that he was “very much” considering some on China at the weekend.
There was not much reaction from the Mexican peso . It edged down slightly to 20.6 per dollar, while Canada’s currency was a touch weaker at C$1.45. Its central bank is expected to cut rates by another a quarter point later.
Sweden’s Riksbank had already got that ball rolling. It cut its main rate by a quarter point to 2.25% – its fifth cut in a row and the sixth since May last year. The crown brushed off the expected move, however.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.24%.
Oil prices eased slightly, with Brent crude oil futures dipping to $76.95 per barrel, continuing a recent decline. U.S. West Texas Intermediate crude sagged to $73.19 after a similar slide.
The day’s crypto action meanwhile came from the Czech Republic where its central bank Governor Ales Michl said in an interview with the Financial Times he would present a plan to the bank’s board on Thursday to buy bitcoin.
He added that, if approved, the bank could eventually hold as much as 5% of its 140 billion-euro ($146.13 billion) reserves in the cryptocurrency.
Bitcoin was last trading at $101,991, up about 1.60%.
By Marc Jones and Lawrence Delevingne
Reuters