The Fed’s rate cut did not come without downside, as the Chair Jerome Powell indicated it now forecasts less than two total rate cuts to occur in 2025. While late-afternoon trading on Wednesday signalled strong distate from the market, on Thursday, Wall Street ticked modestly upwards. European stocks took a steep fall, following Wall Street's lead on Wednesday.
Fed rate cut decision triggers buying opportunity
After late Wednesday afternoon's post-Fed meeting sell-off, the Dow, Nasdaq, and the S&P 500 all rose +0.4% on Thursday. However, investors traded particularly cautiously, with volumes light as the implications of a slower-than-anticipated rate cutting cycle was contemplated. Megacaps Nvidia and Amazon.com added +3.2% and +2.1% respectively, gaining back some ground. Micron plunged -15.5% after it released its forecast of quarterly revenue and profit below market estimates. In treasury notes, the US 2-year treasury bond yield fell -3 bps to 4.323%, while its 10-year counterpart leapt +9 bps to 4.592%, reflecting investors revising their rate-cutting expectations.
European benchmarks take big hit following Fed rates decision
European stocks took negative cues from the Fed’s rate cut decision as benchmarks took steep drops overnight. The pan-European Stoxx 600 fell -1.5% while the UK’s FTSE 100 plunged -1.1%. The Bank of England, as widely expected, also hit pause on cutting its policy rate — citing stubborn inflation as the reason it cannot cut rates too rapidly. SoftwareOne skyrocketed +7.0% after it announced its purchase of Crayon Group Holding. Stellantis sunk -1.6% after it reported a fall in sales last month. Renault jumped +1.2% after reports emerged that Foxconn is in talks with the carmaker regarding the possibility to sell its stake in the Japanese automaker.
Australia, New Zealand, and China all book losses
The ASX 200 plunged -1.7% after the Fed’s decision to reduce the number of rate cuts in 2025 by half. Woodside Energy sunk -1.9% after it agreed to an asset swap with Chevron that freed up US$400m in cash. Transurban added +0.1% after it reaffirmed its FY25 distribution guidance. Across the ditch, the NZX 50 also tanked -0.9%. In Asia, China’s CSI 300 was the only benchmark in the green, inching +0.1% upward. Korea’s Kospi led losses, falling -2.0%, followed by the Nikkei 225 with -0.7%. Hong Kong’s Hang Seng dropped -0.6%, and the Shanghai Composite cut -0.4%.
Commodities mixed, WTI Crude and Iron Ore down, Gold up
WTI Crude fell -0.8% to US$70.02/bbl, Iron Ore down -0.8% to US$104.73/MT, and Gold added +0.3% to US$2,595.04/oz.
NZ Headlines
New Zealand’s economy has fallen off a cliff after recording two consecutive negative quarters, including a much deeper than expected decline in the third quarter.
Outgoing ANZ chief executive Shayne Elliott has foregone his long term variable remuneration worth an estimated A$3.2m (NZ$3.5m) for 2025 in 'recognition of shareholder views' on the bank’s involvement in a bond trading scandal.
Comvita has warned shareholders of a significant profit downgrade as it closes out the first half of its 2025 fiscal year. Through a trading update to the NZX, the listed honey and wellness company forecasted a net loss after tax of between NZ$6.5m and NZ$7.5m, a steep decline from the NZ$3.2m loss reported during the previous corresponding period.
The Sanford board says it is satisfied with its ratio of independent directors to non-independent directors. Sanford chair Robert McLeod addressed shareholders at the company's annual meeting yesterday and conceded that with an even split of independent and non-independent directors the NZX-listed seafood company did not meet NZX recommendations.
Today's Events
- Marlborough Wine Estates Group (MWE): AGM