Markets Mixed Ahead of Federal Reserve Decision

Tech Sector Weighs on Wall Street as Tariff Concerns and Regulatory Pressures Intensify

Global equity markets are trading with a mixed tone on Wednesday as investors brace for the Federal Reserve’s policy announcement, expected at 20:00 CET. Market participants are closely watching for any forward guidance from Fed Chair Jerome Powell that could hint at the central bank’s outlook for interest rates in the second half of 2025.

Wall Street Closes Lower as Tech Stocks Struggle

U.S. equities edged lower on Tuesday, with the tech sector under pressure amid renewed concerns over tariffs and emerging regulations targeting AI chip exports.

Nvidia shares fell 0.25%, outperforming the broader market despite slipping, after reports surfaced of pending U.S. legislation to crack down on unauthorized sales of advanced AI chips to China. The proposed laws could require chipmakers to track chips post-sale and prevent unlicensed activation — a move that, while aimed at tightening national security, could add operational complexity for companies like Nvidia.
Microsoft stock declined 0.66% following the company’s announcement of a price increase for its Xbox Series consoles, citing rising production costs tied to tariffs on Chinese electronics. The tariff-driven cost pressure is beginning to bite into the consumer electronics segment, with potential downstream effects on demand and profit margins.

These developments added to an already cautious sentiment as traders await clarity from the Fed on its monetary policy trajectory.

Forex Market: USD Strengthens Modestly

The U.S. dollar gained ground against most major currencies ahead of the Fed meeting, reflecting investor positioning for a potentially hawkish tone.

USDJPY rose 0.5%, as diverging interest rate expectations between the Fed and the Bank of Japan continue to support the greenback.
EURUSD and GBPUSD both slipped 0.1%, as softer inflation expectations in Europe and the U.K. weigh on their respective currencies.
AUDUSD dropped 0.1%, despite relatively stable commodity prices, as wage growth concerns in Australia begin to emerge ahead of upcoming data.

The FX market’s cautious tone highlights how pivotal today’s Fed announcement could be in shaping global capital flows and dollar strength going forward.

Stock Market Indexes: Regional Divergence

Global equity indexes reflected regional disparities in sentiment:

Index	Change
DJI (Dow Jones)	+0.5%
NIKKEI (Japan)	+0.4%
HK50 (Hong Kong)	-1.1%
AU200 (Australia)	+0.6%

The Dow Jones Industrial Average posted modest gains, supported by cyclicals and defensive sectors.
Hong Kong’s HK50 was the notable laggard, shedding 1.1% amid lingering concerns over geopolitical tensions and export restrictions on Chinese tech firms.
Australia’s ASX 200 (AU200) rose 0.6%, as mining and banking stocks led the advance on improving local sentiment.

Commodities: Oil Rebounds, Gold Weakens

Energy markets stabilized, with Brent and U.S. crude both posting slight gains:

Commodity	Change
#C-BRENT	+0.3%
OIL	+0.3%

Oil prices found footing after recent declines, buoyed by expectations of steady demand and lower-than-expected inventory builds in the U.S. Meanwhile, gold lost ground, with XAUUSD down 0.4%, as rising Treasury yields and a stronger dollar reduced the appeal of the non-yielding metal ahead of the Fed’s announcement.

Outlook: All Eyes on the Fed

With inflation still hovering above the Federal Reserve’s 2% target and the labor market showing signs of resilience, investors are keen to decipher whether the Fed is leaning toward maintaining rates or signalling a potential cut later in 2025.

Key factors traders will watch:

Any mention of inflation outlook or changes to the Fed’s balance sheet reduction plans.
The updated dot plot and economic projections, if released.
Powell’s tone during the press conference — whether hawkish, dovish, or neutral.

Conclusion

Today’s trading reflects a market in limbo, awaiting direction from the world’s most powerful central bank. With tech stocks under scrutiny, geopolitical trade tensions on the rise, and investors recalibrating expectations for monetary policy, volatility could accelerate depending on the Fed’s tone.

For traders:
Be prepared for sharp intraday movements across U.S. indices, the dollar, and gold once the Fed decision is announced at 20:00 CET. Tighten risk controls and monitor bond yields for confirmation of market direction.