Wall Street Reaches Record Highs As Fed Cuts Rates

Wall Street reached record highs on Thursday after the Federal Reserve cut interest rates by 25 basis points, as expected. Chinese blue-chip stocks notably rose nearly 6% this week on anticipated Beijing stimulus to counter President Trump's proposed tariffs. European futures pointed higher despite the FTSE slipping after the Bank of England warned of inflation risks. Germany’s political landscape remains uncertain as Chancellor Olaf Scholz’s coalition collapsed.

Equities

The FTSE 100 closed down 0.3% on Thursday following the Bank of England's decision to reduce interest rates to 4.75% from 5%, aligning with expectations, but with an added projection of increased inflation and economic growth. The index was pressured by the pound’s 0.8% increase, affecting companies with heavy overseas exposure.

Electronics distributor RS Group jumped 13% after its first-half results, while BT fell 3.6% after revising its revenue forecast to a slight decline. Rolls-Royce dipped about 4% after maintaining its guidance for a minimum 30% profit growth this year. John Wood Group saw a dramatic 60% fall, driven by an 8% drop in its third-quarter order book.

Across the Atlantic, US stock indices showed gains as the Federal Reserve cut interest rates by 25 basis points amid expectations for regulatory and tax changes under President Donald Trump's administration.

The S&P 500 rose by 0.74%, reaching 5,973.10, with the communications services sector leading, supported by an 11.81% surge in Warner Bros Discovery shares, which reported a surprise third-quarter profit. The Nasdaq jumped 1.5% to 19,269.46, with advancing issues on both exchanges outnumbering decliners by substantial ratios.

Financial stocks saw some losses, with JP Morgan down 4.32% and Goldman Sachs shedding 2.32%, weighing on the Dow, which remained relatively flat, closing at 43,729.34. Treasury yields, which had recently surged, eased slightly from a four-month high, closing at 4.332% for the benchmark 10-year note.

In economic data, weekly US jobless claims showed a minor increase to 221,000, reflecting continued resilience in the job market despite some recent policy adjustments.

Forex & Commodities

The US dollar edged higher, looking to end a turbulent week with gains as investors weighed Donald Trump’s return to the White House and its potential effects on US interest rates. Meanwhile, the British pound stabilised around $1.2970 after hitting a three-month low earlier in the week. The euro dropped to $1.0782, extending losses amid a political crisis in Germany, where Chancellor Olaf Scholz's coalition collapsed.

Gold prices were set for a second consecutive weekly fall, sliding nearly 2% to $2,687.65 per ounce.

The US Federal Reserve's recent 25 basis-point rate cut was largely anticipated, but its cautious approach to further easing kept pressure on bullion. Rising rates diminish gold’s appeal by raising the opportunity cost of holding the non-yielding asset.

Oil prices saw modest declines as Hurricane Rafael, previously threatening US oil output, began to weaken. Brent crude fell to $75.16 per barrel, while West Texas Intermediate (WTI) crude eased to $71.81, though both benchmarks remained poised for weekly gains. Prices were bolstered earlier by the possibility of tighter US sanctions on Iran and Venezuela under Trump’s administration, potentially curbing global supply.