What moved
- US: The S&P 500 is 0.28% higher at 7,743.98, the Nasdaq Composite is up 0.27% at 26,549.85 and the Dow is up 0.19% at 52,475.10. In after-hours futures, the S&P 500 contract is up 0.07% and the Nasdaq 100 contract down 0.08%, as two big tech reports pull in opposite directions.
- Europe ended flat: the DAX rose 0.44%, the FTSE 100 0.07% to 10,694.5 and the Euro Stoxx 50 0.05%, while the CAC 40 was unchanged.
- Asia led the day. The Kospi closed 9.93% higher at 6,012.44, the Nikkei gained 2.84% and Taiwan 2.16%. China missed the rally: the Hang Seng fell 0.5% and Shanghai 0.43%.
Why
The Fed was the event, and its decision matched expectations: rates on hold, but with two dissenters, Lisa Cook and Beth Hammack, voting for a quarter-point hike. The statement upgraded the economy to 'strong' and said inflation 'remains elevated'. Futures already treat a December hike as likely. Chair Kevin Warsh also disputed the idea that AI spending is immune to higher borrowing costs, saying rates 'get in the cracks'. Bonds took the hawkish reading. The 10-year yield rose 5.2bp to 5.045% and the 30-year 5.6bp to 5.361%, while the 13-week bill yield fell 4.5bp. Higher long yields hurt growth stocks most, because their value rests on profits far in the future.
Asia's rally has a clearer cause. SK Hynix reported a record quarter, with operating profit of 83.3 trillion won on revenue above 100 trillion won. It added a buyback and a special dividend and said AI demand for memory is outrunning supply. That pulled chip stocks up across Seoul, Tokyo and Taipei; Samsung reports on Thursday.
In London, Chancellor John Healey's Budget calmed the gilt market but disappointed on housing. Investors doubted the size and timing of a first-time-buyer scheme, and Taylor Wimpey fell 7.26% and Persimmon 6.89%. The bank surcharge doubles from 3% to 6% for 15 months. Crude gave no clear signal: WTI rose 2.07% to $101.97 on renewed US–Iran tension, but Brent fell 2.87% to $110.61.
Sentiment & risk appetite
Volatility eased once the Fed was out of the way: the VIX fell 0.61 to 16.91 and the MOVE index, which tracks bond-market volatility, fell 3.32 to 94.55. The US rally was narrow, though. Technology rose 0.8% while utilities fell 0.84% and real estate 0.73%, so the rate-sensitive sectors paid for higher yields. Safe havens barely moved: gold was up 0.06% and the dollar index down 0.17%. Only Asia was broad: by PrimerIQ's count, 8,188 stocks rose against 4,081 that fell, and our median Asian tech stock gained 3.16%. Europe was evenly split, with 1,693 up and 1,756 down.
Economic calendar
The Fed statement came at 14:00 ET and Warsh's press conference at 14:30 ET. From 2027 the Fed will hold fewer policy-setting meetings, setting one of its eight aside for strategy. In the UK Budget, the Office for Budget Responsibility raised its 2026 growth forecast to 1.2% and cut 2027 to 1%. The government's fiscal headroom for 2029–30 shrank to £15bn.
Thursday is busy. US third-quarter GDP and September personal income and spending come at 08:30 ET; second-quarter growth was 2.2% and August PCE inflation 3.4%. The ECB decides at 14:15 CET (13:15 GMT), with its press conference at 14:45 CET. The Bank of Japan announces on Friday.
Earnings
Microsoft beat, with EPS of $4.89 against $4.71 expected, Azure growth of 48% and capital spending below forecasts; the shares rose after hours. Alphabet missed badly, with EPS of $2.12 against $2.94 expected. Google Cloud revenue more than doubled, but free cash flow was deeply negative, and the shares fell sharply after hours. ServiceNow, FedEx and eBay also beat comfortably, while Equinix reported $4.93 against $9.28 expected.