Markets React to Fed's Unchanged Interest Rate Decision and Trump's Tariff Moves

The MSCI global equities gauge slipped on Wednesday as the U.S. dollar rose, following statements from Federal Reserve Chair Jerome Powell. Powell dampened investor expectations for a September interest rate cut, stating it was premature to make a decision. The Federal Reserve maintained its interest rates during its two-day policy meeting, citing moderating economic growth, and provided little indication of when rates might be reduced. Disagreements were noted among Federal Reserve governors, some appointed by President Trump, who has frequently criticized the board for not lowering rates.

Despite an initial muted reaction, equity markets fell sharply, driven by Powell's remarks at a press conference that any rate cuts would be contingent on forthcoming economic data. "Markets anticipated September rate cuts, but Powell provided no such guidance," stated Jamie Cox of Harris Financial Group. Stock indices, such as the Dow, S&P 500, and Nasdaq, experienced varied reactions, whereas MSCI's global stocks index declined.

The dollar appreciated against major currencies as Powell spoke, while bond yields increased, reflecting market uncertainty over future Fed decisions. Meanwhile, oil prices rose over 1%, buoyed by geopolitical factors, including President Trump's trade moves. Tariffs announced on specific copper products caused a drop in U.S. copper futures, indicating tension in trade relations. Gold continues its decline, influenced by economic data and Fed's stance, with existing economic indicators portraying growth concerns.

(With inputs from agencies.)