Tech leads Wall Street rebound from Fed hike as BoJ lifts rates to 1.25%

• US (closed Thursday): S&P 500 +1.14% to 7,637.76; Nasdaq Composite +1.69% to 26,418.30; Dow +0.61% to 51,778.04. S&P 500 futures are trading +1.14% at 7,726.75 and Nasdaq 100 futures +1.46% overnight, the only live read on the US day.
• Europe (closed Thursday): FTSE 100 +1.19% to 10,816.14, within 1.6% of its 52-week high; DAX +0.70% to 25,716.71; CAC 40 +0.57% to 8,186.93; Euro Stoxx 50 +0.90% to 6,322.90.
• Asia (live): Nikkei 225 +1.55% at 65,132.73 after the BoJ hike; Kospi +2.54% at 6,886.27; Hang Seng +0.98% at 24,845; Shanghai Composite +0.90%. Taiwan finished +1.93%.

Thursday was about digesting the Federal Reserve's first rate rise in years. The Fed lifted its target range by 25 basis points to 3.75–4.00% on Wednesday, with Chair Kevin Warsh saying inflation remains the central problem and most policymakers pencilling in another quarter-point move before year-end. Stocks fell on the day; by Thursday the reading had flipped to relief that the central bank was acting on inflation rather than falling behind it. The US 10-year yield dropped 5.9 basis points to 4.947%, the 30-year fell 5.3 basis points to 5.296%, and lower long rates are oxygen for growth stocks whose value sits far in the future — hence Nasdaq's outperformance and technology's 2.25% sector gain.

Oil helped. Brent is trading at $103.48, down 1.28%, after the US Energy Secretary indicated Saudi Arabia's East-West pipeline would be restored soon, easing the supply fears that have kept crude above $100. Cheaper oil is disinflationary at the margin and lowers the bar for central banks, which is why bonds and equities rallied together.

Overnight the Bank of Japan raised its policy rate to 1.25% from 1.0%, a 31-year high and widely expected. The yen weakened on the news regardless — USD/JPY is 0.7% higher at 157.10 — a classic sell-the-fact reaction that has helped Japanese exporters and pushed the Nikkei up. The Bank of England held at 3.75% on Thursday by a 6–3 vote, with three members wanting a hike and the minutes flagging inflation heading above 4% in early 2027 if energy prices persist; the market has moved on to pricing a November move.

Risk appetite has clearly recovered. The VIX fell 12.82% to 15.44 and the MOVE index of rates volatility dropped 5.59% to 76.2, so both equity and bond markets are pricing calmer conditions after the Fed. Breadth backed the move: across PrimerIQ's US universe 3,668 names rose against 2,165 fallers, an advance/decline ratio of 1.69, and our UK count was 524 up to 238 down. Dispersion was wide, though — technology +2.25% at the top, communication services −0.58% and financials −0.09% at the bottom — so the leadership was tech-heavy rather than uniform. Gold's 0.58% gain to $4,425 and the dollar index at 100.29 (+0.07%) show haven demand has not been abandoned, only paused.

UK retail sales volumes for August rose 0.5% month-on-month, against consensus for a 0.2% fall, and 2.4% year-on-year versus 1.9% expected, rebounding from July's 0.5% decline; the three months to August were up 0.9% on the prior three. That is a stronger consumer than the hawks on the MPC needed, and sterling is little changed at $1.3373 on the print. Overnight the Bank of Japan raised rates to 1.25% and Tokyo core CPI for August came in at 1.8% year-on-year, a touch above the 1.7% forecast.

Still to come: Fed Governor Bowman speaks at 09:30 ET (14:30 BST); US industrial production for August at 09:15 ET (14:15 BST), consensus +0.3% month-on-month with capacity utilisation seen at 76.4%; the Conference Board leading index at 10:00 ET (15:00 BST), consensus +0.1%. It is also quarterly triple-witching in the US, so expect heavy volumes and possible price distortion into the close.

Nothing of consequence has reported this morning. Thursday's corporate stories were guidance-driven rather than results-driven: Generac closed 18.34% higher on an $8bn deal to supply Amazon with data-centre backup generators, while Bilfinger lost 21.44% in Frankfurt after cutting its 2026 revenue range to €5.3–5.7bn and its EBITA margin guidance to 3.2–3.6%, blaming customer restraint tied to the Middle East conflict.