Global stock markets advance as investors await the Federal Reserve's rate cut decision and key Big Tech earnings reports [Image by Getty Images]
Markets rallied worldwide on the back of optimism from U.S. President Donald Trump’s Asian tour and expectations of relief from tense United States-China relations. Investors anticipate the Fed to reduce rates to cushion slowing job growth and dwindling inflation, setting the stage for a potentially frenzied trading day later.
Asia Leads Global Gains
In Asia, Japan’s Nikkei 225 rose 2.2% to 51,307.65, another all-time high. President Trump’s visit to Tokyo and vow of $490 billion in investment helped fill investors with optimism. South Korea’s Kospi rose 1.8% to 4,081.15, and China’s Shanghai Composite gained 0.7% to 4,016.33 ahead of President Trump’s expected meeting with Chinese President Xi Jinping at a regional summit in Seoul.
The likelihood of renewed Washington-Beijing dialogue provided Asian risk appetite with a lift. “The anticipation that Trump will revert to China reduces fears about fresh tariffs,” Macquarie Group strategist Thierry Wizman said. “That optimism is underpinning global sentiment.”.
Australia’s S&P/ASX 200 fell 1% after hotter-than-expected inflation figures, at 3.2%, killed hopes of a local rate cut. Taiwan’s Taiex gained 1.2%, and India’s Sensex gained 0.4%.
Early European trading had Germany’s DAX down 0.1% to 24,263.51, France’s CAC 40 flat at 8,214.15, and Britain’s FTSE 100 up 0.5% to 9,744.44.
U.S. stock futures were poised for a muted opening: S&P 500 futures gained 0.1%, and Dow Jones futures declined 0.3%. Investors are holding back ahead of the Fed’s 2:00 p.m. ET announcement.
Wall Street pushed its record streak to another day on Tuesday, as the S&P 500 advanced 0.2%, the Dow gained 0.3%, and the Nasdaq Composite rose 0.8%. The tech behemoths led the charge, driven by Nvidia, which jumped 4% and pushed its market cap to a $5 trillion level, the first U.S. company to ever achieve this feat. Microsoft, worth more than $4 trillion, rose 2%, with AMD and Micron also higher.
Economists expect the Fed rate cut action to lower the benchmark range to 3.75%–4.00%, which will be the second consecutive cut this year. Traders see a 96% possibility of a 25 basis point cut, according to CME FedWatch Tool.
New evidence supports the action: September’s CPI rose 2.8% year-over-year, its lowest rate in over two years, as the labour market added only 145,000 jobs. Economists believe the Fed is acting to head off a worse slowdown.
“The Fed only has limited new data due to the government shutdown, so they’re going cautiously,” said Swissquote’s Ipek Ozkardeskaya. “Markets have already priced in the 25-basis-point cut.”
Fed Chief Jerome Powell will be available for a press conference at 2:30 p.m. ET, and investors will look for clues about future policy moves. A dovish tone could extend recent market advances, while a hawkish tone would deflate momentum.
Rounding out the day’s heat, Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) will report Q3 2025 earnings after the close of the markets.
Analysts expect
Microsoft: $62.3 billion in sales driven by AI and Azure growth. Alphabet: $84.1 billion in sales supported by high-margin YouTube and Google Cloud growth. And, Meta: $41.5 billion in sales, 22% year-over-year growth as ad demand climbs.
With over $5 trillion in collective market capitalization, these results could move the entire S&P 500 and Nasdaq Composite in post-market hours. Specialists warn that any disappointing guidance could cause startling reversals, particularly at current record valuations.
Market Reactions and Expectations
If there is confirmation of a 25-basis-point rate reduction by the Fed, markets would probably respond positively:
Stocks: Growth stocks and technology names can keep going up. Bonds: Short-term Treasury yields can decline, flattening the curve. Dollar: The dollar can weaken as falling rates reduce demand. Commodities: Oil and gold would move up on a weaker dollar. And, Crypto: Bitcoin and Ethereum would rise as liquidity improves.
But Powell’s hardline message can dash expectations in an instant. The CBOE Volatility Index (VIX) has already jumped to 23.8, the highest since June, showing greater investor worry.
Trading in commodities, U.S. benchmark crude rose 11 cents to $60.26 a barrel, and Brent crude rose 13 cents to $63.96. The U.S. dollar strengthened to ¥152.24, and the euro dropped to $1.1644.
Wednesday’s Fed rate cut action, added to blockbuster Big Tech quarterly earnings, ranks it among 2025’s most significant trading sessions. A dovish Powell and strong corporate results can fuel a year-end advance, but any sign of caution may usher in volatility.
As New York Life Investments’ Lauren Goodwin stated:
“Markets are thirsty for reassurance. If the Fed reaffirms a supportive tone, enthusiasm can carry through the remainder of the year.”
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