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Fed, tech earnings unsettle markets

Global markets were mixed midweek as the Federal Reserve cut rates but flagged caution over further easing. US stocks closed mostly flat or lower after Fed Chair Powell’s remarks dampened hopes for another rate cut, although technology shares were supported by Nvidia’s record-breaking rally and mixed results from Meta, Microsoft and Alphabet highlighted the sector’s surging AI investment costs. Meanwhile, the first Trump-Xi summit in six years delivered a rare earths supply agreement and tariff reductions, yet Asian shares slumped and investors remained wary amid unresolved tensions. Elsewhere in central banking, the Bank of Japan held rates despite persistent inflation, the Bank of Canada lowered its policy rate as trade pressure weighed on growth.

Date 30 October 2025
Author Shane Strowmatt, Senior Investment Writer
Reading time 5 minutes

Fed interest rate pause — © Shutterstock

The US Federal Reserve cut its benchmark rate by 0.25 percentage points to a range of 3.75% to 4% on Wednesday, but Chair Jerome Powell indicated at the press conference that another cut in December is "not a foregone conclusion" due to differing views among policymakers and heightened uncertainty owing to a government shutdown that has limited economic data. Powell cited moderately firmer economic growth, persistent though slightly elevated inflation, and signs of a softening labour market, while acknowledging concerns over widespread layoffs and the impact of tariffs on prices. Key US stock indices slipped into negative territory late on Wednesday following the comments from Powell. After initially reaching new record highs, the Dow Jones Industrial Average ended down 0.2% at 47,632.00 points, while the S&P 500 was essentially flat at 6890.59 points and the Nasdaq 100 rose 0.4% to 26,119.85 points, with technology shares buoyed by a favourable rate environment. In corporate developments, Nvidia became the first company ever to surpass a USD 5 trillion market capitalisation on Wednesday, after its stock rose 3% during the session. The milestone followed strong investor optimism spurred by President Trump’s comments regarding the potential approval of Nvidia’s AI chips for export to China, as well as multiple announcements from the company’s chip technology conference event on Tuesday, which helped push shares higher by 5% that day.

Big tech earnings hit by surging AI investments

Meta, Alphabet and Microsoft each reported quarterly results on Wednesday that highlighted ambitious spending to seize opportunities in artificial intelligence, creating contrasting market reactions. Meta Platforms posted revenue ahead of expectations but saw its shares drop 6.5% in after-hour trading as a tax-related charge and raised capital expenditure forecasts for 2025 and 2026 unsettled investors, with the company anticipating AI-driven infrastructure and compensation costs to accelerate next year. Alphabet’s parent Google surpassed analyst forecasts for both earnings and revenue, with a boost from strong demand for Google Cloud’s AI services and several multibillion-dollar enterprise deals, sending its share price up nearly 6% after hours. Microsoft also topped revenue and profit projections, thanks to a 26% increase in commercial cloud sales, but its stock fell 3.4% as capital spending jumped 74% year-on-year due largely to increased investment in AI chips and infrastructure, reflecting intensifying competition among the tech giants to build out capabilities in cloud and artificial intelligence.

US and China agree rare earths deal

US President Donald Trump announced a one-year agreement with China on rare earths and critical minerals supply, following a meeting with Chinese President Xi Jinping in South Korea on Thursday. Trump also halved tariffs on fentanyl-related Chinese goods to 10%, reducing overall duties on Chinese exports to 47%, with Beijing agreeing to intensify efforts to curb fentanyl precursor exports and to resume US agricultural imports, including soybeans. Markets responded with a drop in soybean futures in Chicago, while China’s CSI Rare Earths Industry Index shot up. Despite continued unresolved tensions, the talks generally exceeded market expectations, marking the first meeting between Trump and Xi in six years and setting a conciliatory tone for further talks.

Asian stocks mostly lower, BOJ holds rates

Chinese and Hong Kong stocks declined on Thursday, following the meeting of the leaders of the world's two largest economies. Hong Kong’s Hang Seng Index lost 0.7% and mainland China’s CSI 300 retreated 0.9% as investors digested the summit outcome and awaited clarity on further developments. Korea’s Kospi was up 0.1%, while Australia’s S&P/ASX 200 dropped 0.5%. Japan’s Nikkei 225 lost 0.1%, after Japan’s central bank opted to maintain its benchmark interest rate at 0.5% on Thursday, following the first monetary policy meeting since Prime Minister Sanae Takaichi assumed office earlier this month. The decision, delivered by a 7-2 vote, came despite inflation surpassing the Bank of Japan’s 2% target for 41 consecutive months, with two board members unsuccessfully calling for a rate hike to 0.75%. Market reactions were muted with Japanese bond yields little changed and the yen weakening slightly against the US dollar.

Bank of Canada cuts rate to 2.25%

Canada's central bank reduced its benchmark interest rate by 0.25 percentage points to 2.25% on Wednesday, marking the second consecutive cut, as ongoing US tariffs and economic uncertainty weighed on growth despite a 0.5 percentage point rise in September inflation to 2.4% and a stronger labour market last month. The Bank of Canada signalled that the current policy rate is likely sufficient to keep inflation near its 2% target, with further decisions to be guided by economic developments and the outcome of federal budget and trade negotiations. The central bank’s latest report projects weak but gradually improving GDP growth, although Canadian output is forecast to remain about 1.5% lower by the end of 2026 compared to earlier forecasts, largely due to persistent trade-related structural challenges. Underlying inflation remains around 2.5%, as tariff-related cost pressures are being alleviated by excess supply and subdued domestic demand.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Amazon, Apple, Bristol-Myers Squibb, Cigna, Comcast, Eli Lilly, ING, Mastercard, Merck, S&P Global, Sandoz, Shell, Stellantis, Stryker, TotalEnergies, and Volkswagen.

Economic data in focus: French gross domestic product (07:30), Swiss KOF Economic Barometer (09:00), German unemployment rate (09:55), Italian gross domestic product (10:00), German gross domestic product (10:00), euro-area gross domestic product (11:00), euro-area unemployment rate (11:00), US gross domestic product (13:30) and European Central Bank interest rate decision (14:15).

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