LDN - Business

World shares are mixed ahead of Fed's rate decision

[May 07, 2025] By ELAINE KURTENBACH

World shares were mixed on Wednesday as the Federal Reserve prepared to wrap up its policy meeting with virtually everyone expecting it to keep interest rates unchanged despite President Donald Trump's calls for it to cut borrowing costs.

Germany's DAX was nearly unchanged at 23,250.56, while the CAC 40 in Paris slipped 0.5% to 7,661.64. Britain's FTSE 100 shed 0.3% to 8,573.67.

The futures for the S&P 500 and the Dow Jones Industrial Average were up about 0.6%.

In Asia, shares advanced after the U.S. and China said they plan to hold trade talks in Switzerland later this week.

Hong Kong’s benchmark briefly jumped more than 2% after officials in Beijing rolled out interest rate cuts and other moves to help support the Chinese economy and markets as higher tariffs ordered by Trump hit the country's exports.

But the markets' reaction to both developments was relatively restrained.

Tokyo's Nikkei 225 edged 0.1% lower to 36,779.66.

The Hang Seng in Hong Kong gained only 0.1% by the end of trading, closing at 22,691.88. The Shanghai Composite index rose 0.8% to 3,342.67.

The trade talks may account for the decision to announce the economic rescue package, Lynne Song of ING Economics said in a report.

“This way, the easing won’t be seen as a knee-jerk reaction to tariffs. Policymakers are likely now privy to some of the early data on how the economy is being impacted by the tariff shock,” Song said.

But analysts said the muted response to the policies announced Wednesday also may reflect disappointment over the lack of major government spending increases that many economists say may be needed to wrest the Chinese economy out of its doldrums.

“These will help to shore up growth at the margin. But any boost to credit demand will be modest and today’s moves are no substitute for an expansion in fiscal support," Julian Evans-Pritchard of Capital Economics said in a report.

Australia's S&P/ASX 200 picked up 0.3% to 8,178.30, while the Kospi in South Korea gained 0.6% to 2,573,80.

On Tuesday, U.S. stocks closed lower as quarterly results showed more companies refraining from forecasting their future profits because of uncertainty created by Trump’s tariffs.

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A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, May 7, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)

The S&P 500 fell 0.8% in its second drop after breaking a nine-day winning streak, its longest such run in more than 20 years. The Dow dropped 0.9%, and the Nasdaq composite finished 0.9% lower.

Palantir Technologies, which offers an AI platform for its customers, was one of the heaviest weights on the market as it sank 12%.

AI-related companies have been finding it more difficult recently to convince investors to support their stocks after they’ve already shot so high. Palantir’s stock’s price remains near $110, when it was sitting at only $20 less than a year ago.

Uncertainty around tariffs has made U.S. households more pessimistic about the economy and could affect their long-term plans for purchases. That uncertainty has helped fuel a surge in imports ahead of potentially more severe tariffs ahead.

The U.S. trade deficit soared to a record $140.5 billion in March as consumers and businesses alike tried to get ahead of tariffs that went into effect in April and others that have been postponed until July. Last week, the government reported the U.S. economy shrank at a 0.3% annual pace during the first quarter of the year because of a surge in imports.

Some companies say they’re already seeing impacts to their business from the uncertainty created by tariffs.

DoorDash fell 7.4% after reporting weaker revenue than analysts expected for the latest quarter.

Also early Wednesday, the yield on the 10-year Treasury rose to 4.32% from 4.31% late Tuesday.

U.S. benchmark crude oil gained 54 cents to $59.63 per barrel. Brent crude, the international standard, gained 44 cents to $62.57 per barrel.

The dollar rose to 143.39 Japanese yen from 142.41 yen. The euro fell to $1.1348 from $1.1369.

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