ASX 200 futures were down 15 points or 0.16% at 8:30 am AEST, pointing to a weaker start. Yesterday, the index lost 63 points or 0.71% to close at 8,814, dragged down by Real Estate, Consumer Discretionary and Materials. Utilities, Energy and Information Technology provided some offset. The index slipped back from resistance at 8,880–8,900, leaving it in a holding pattern ahead of key economic data.
Property and consumer-facing stocks bore the brunt of the selling as investors positioned ahead of the US Federal Reserve’s rate decision and Australia’s jobs data. Vicinity Centres, Stockland and GPT Group all posted losses of more than 2%.
Consumer stocks including Temple & Webster, Kogan and Harvey Norman also closed lower. Markets are now pricing in an 18bp chance of a November RBA cut, with 50bp of easing expected by May 2026.
Fed delivers expected 25bp cut
US stock markets ended mixed overnight as the Federal Reserve lowered the federal funds rate by 25 basis points to a range of 4.00–4.25%. The move was widely expected, but the policy statement and press conference delivered both dovish and hawkish signals, creating a volatile reaction across equities, bonds and currencies.
The decision was not unanimous. Newly appointed board member Stephen Miran dissented, preferring a larger 50bp reduction. Hopes that Governors Waller and Bowman might support a “super-sized” move were dashed, reinforcing the Fed’s cautious approach to balancing inflation risks against softer growth momentum.
Fed Chair Jerome Powell’s tone shifted between prepared remarks and the Q&A session. Initially, he emphasised downside risks to employment and suggested the easing cycle had further to run. However, when pressed by reporters, Powell described the cut as a “risk management” measure, noting, “If you look at the SEP, the projections for growth have actually ticked up.”
He later added: “The unemployment rate is 4.3%. The economy is growing at one and a half percent. So, it’s not a bad economy… but from a policy standpoint, there are no risk-free paths now.” This comment highlighted the Fed’s balancing act: easing enough to support the labour market without reigniting inflationary pressures.
Despite Powell’s caution, market pricing remains more dovish than the Fed’s guidance. Futures imply two additional 25bp cuts this year—likely in October and December—followed by another in the first quarter of 2026. The bond market sold off on the upward revisions to growth and inflation forecasts, while the US dollar strengthened on short-covering flows.
European shares flat as investors hold back
European markets ended broadly unchanged on Wednesday as traders awaited the Fed outcome. The FTSEurofirst 300 index was steady, while the UK’s FTSE 100 edged up 0.1%.
Gains in technology and retail were offset by losses in energy and mining, while Puma surged 16.7% on takeover speculation.
US dollar gains on Fed outlook
The greenback strengthened after the rate cut, sending the euro down to US$1.1810, the Australian dollar to US$0.6650 and the yen to 146.95 per dollar.
Commodities weaken on demand concerns
Oil prices eased after US inventories rose more than expected, with Brent closing at US$67.95 and WTI at US$64.05. Base metals also declined, while gold fell 0.2% to US$3,717.80 an ounce. Iron ore slipped to US$105.30 a tonne amid higher Brazilian shipments and subdued steel demand.
Looking ahead
Locally, labour force and population data are due, while a2 Milk, Cochlear and South32 trade ex-dividend. Offshore, the Bank of England announces its policy decision, with US data on jobless claims, manufacturing and leading indicators due. FedEx will also release quarterly results.