Stocks on Wall Street were broadly weaker ahead of the Federal Reserve’s first policy review under Trump 2.0 and as investors await earnings major tech companies after the bell.
The Fed is expected to keep the federal funds rate in a range of 4.25%-to-4.5% as the central bank weighs up any inflationary pressures that may revive with the new White House administration’s policy prescription and as the US economy remains robust.
The Bank of Canada and Sweden’s Riksbank cut their key rates overnight, while the European Central Bank is also expected to follow suit. Meanwhile, Australian inflation data yesterday has opened the door for a potential rate cut across the Tasman as soon as next month.
“The Fed is expected to leave rates unchanged which is the first pause since the easing cycle began in September,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Steady policy is fully discounted by market pricing and attention will focus on any changes to the statement and chair (Jerome) Powell’s press conference.”
The kiwi traded at 56.54 US cents at 7am from 56.69 cents yesterday and was at 90.75 Australian cents from 90.77 cents.
Tech earnings loom
The Dow Jones Industrial Average dipped 0.1% while the Nasdaq Composite slipped 0.7% in the runup to the policy review, with tech stocks continuing to wane as investors continue to ponder the impact of China’s DeepSeek on the vast investment plans for artificial intelligence.
Meta Platforms, Microsoft and Tesla are all reporting after trading on Wall Street closes, as is IBM.
Dutch supplier of chipmaking equipment ASML beat expectations for its December quarter sales, and its chief executive Christophe Fouquet welcomed the low-cost Chinese player saying it will boost demand all chips and the machines needed to make them.
And Chinese ecommerce giant Alibaba is the latest to release a new AI model, claiming it’s even better than DeepSeek.
Luxury stocks limited gains in Europe, where Germany’s DAX climbed 1% and France’s CAC 40 declined 0.3% as investors soured on LVMH’s December quarter earnings.
Local data today include the ANZ business confidence survey and the December merchandise trade figures.
There’s also an offering of $500 million of New Zealand government bonds in the weekly tender.
Reporting by Paul McBeth. Image from Chenyu Guan on Unsplash.