Dollar rises after Fed chair says December rate cut not a given
NEW YORK: The US dollar strengthened on Wednesday while Wall Street stocks were mixed after the Federal Reserve indicated its latest interest rate cut might not be repeated in December.
After the US central bank announced a quarter of a percentage point interest rate cut that had been expected, Fed Chair Jerome Powell told reporters that another decrease in December "is not a foregone conclusion, far from it."
The statement jolted US markets, lifting the dollar and pushing all three major US equity indices briefly into the red.
The Nasdaq later recovered, finishing at a fourth straight record high, led by another gain from artificial intelligence giant Nvidia, which became the first company to reach a US$5 trillion market value.
The Dow finished modestly lower while the S&P 500 ended flat.
Oxford Economics characterised Powell as "hawkish," predicting that the central bank would "move to the sidelines" and not cut again until March.
Powell also indicated in his press conference that the lack of economic data due to the US government shutdown could prompt more cautious policymaking.
The Dow had earlier topped 48,000 points following fresh peaks set in London and some Asian markets as US President Donald Trump voiced optimism on the eve of crucial trade talks with China's President Xi Jinping.
Trump predicted a "great meeting," while China's foreign ministry was more cautious, saying Xi and Trump would have "in-depth" talks on "major issues."
Key matters concern thorny trade issues such as Chinese exports of rare earths and US efforts to boost exports of American soybeans to China.
Analysts have also seen Nvidia's latest surge as partly driven by hopes that Trump may negotiate a resumption of the company's exports to China.
The two leaders are set to meet on Thursday in Busan, a southern port city not far from the APEC summit attended by Trump.
The European Central Bank and the Bank of Japan are expected to hold interest rates steady this week.
Benchmark stock indices in Tokyo and Seoul each reached record highs on Wednesday, while European markets were mixed.
After Seoul closed, the United States and South Korea reached an agreement to maintain reciprocal tariffs at 15 per cent and to reduce levies on automobiles and auto parts.
In company news, shares in UK drugmaker GSK rose more than 2 per cent in London after it raised its full-year guidance on strong sales growth.
Shares in Mercedes-Benz rose more than 4 per cent after the company reassured investors it faced no immediate production shutdowns due to microchip shortages, even though third-quarter net profits plunged more than 30 per cent due to Trump's tariff blitz as well as slumping sales in China.
US industrial giant Caterpillar surged 11.6 per cent after reporting better-than-expected profits, partly due to strong demand in its energy and transportation business linked to heavy AI infrastructure investment.
Read More: Here