Wall Street quakes on Fed rate outlook

NEW YORK, New York - U.S. stock markets got smashed on Wednesday while the U.S. dollar soared after the Federal Reserve dropped official interest rates by 25 basis points. The move was widely anticipated however Fed Chair Jay Powell's comment afterwards that only two more rate cuts were likely next year spooked stock and currency markets.

"With today's action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive," Powell said at his post-meeting press conference. "We can therefore be more cautious as we consider further adjustments to our policy rate."

Treasury yields jumped sharply in line with the move in the dollar.

The technology-heavy NASDAQ Composite (^IXIC) led the declines, shedding 716.37 points to finish at 19,392.69, down by 3.56 percent. A sell-off in mega-cap tech stocks and growth-oriented sectors contributed to the steep drop, suggesting that investors remain wary of stretched valuations and slowing innovation cycles.

Meanwhile, the S&P 500 (^GSPC) retreated 178.45 points to settle at 5,872.16, registering a 2.95 percent loss. Weaker-than-expected economic data and lingering worries about persistent inflation weighed on market sentiment.

The Dow Jones Industrial Average (^DJI) recorded a similar slide, losing 1,123.03 points to close at 42,326.87, a decrease of 2.58 percent. Dow components reflecting key sectors-from finance to manufacturing-took broad hits amid uncertainty over the Federal Reserve's policy path and the global growth environment.

As the dust settles, investors and traders will turn their focus to upcoming earnings releases, key economic indicators, and central bank policy announcements. With volatility levels elevated and risk aversion on the rise, market participants remain on the lookout for clear signals that could help stabilize sentiment heading into the next trading sessions

Global Currency Markets: US Dollar Surges as Major Counterparts Sink

The foreign exchange market on Wednesday revealed a sharp upswing for the U.S. dollar against several major counterparts, as the hawkish sentiment around the Federal Reserve's interest rate strategy and shifting global economic outlooks fueled demand for the greenback. The U.S. Dollar Index (DX-Y.NYB) surged 1.22 percent to 108.26, reflecting a 1.31-point gain.

Euro and Pound Under Pressure
The Euro / US dollar (EURUSD) pair tumbled to 1.0359, decreasing by 1.24 percent. Meanwhile, the British pound / US dollar (GBPUSD) fell to 1.2574, declining by 1.06 percent.

U.S. Dollar Gains Against Yen, Swiss Franc, and Loonie
The US dollar / Japanese yen (USDJPY) rate rose to 154.61, gaining 0.73 percent. The US dollar / Swiss franc (USDCHF) climbed to 0.9014, up 1.01 percent, as global investors sought the relative safety of the U.S. currency over the traditionally more neutral Swiss franc.

In North America, the US dollar / Canadian dollar (USDCAD) advanced to 1.4437, up 0.90 percent. Canada's resource-linked economy faced challenges due to softer commodity prices and cooling global demand, providing another tailwind for the greenback's ascent.

Commodity Currencies Slip Sharply
Both the Australian and New Zealand dollars struggled against the strengthening U.S. dollar. The Australian dollar / US dollar (AUDUSD) fell to 0.6226, down 1.74 percent. Similarly, the New Zealand dollar / US dollar (NZDUSD) sank to 0.5657, losing 1.65 percent.

Looking Ahead
Market participants will closely watch upcoming U..S economic indicators and central bank communications for signals of whether the U.S. dollar's run has further room to extend. Should risk-off sentiment persist and the Federal Reserve maintain its hawkish tone, the dollar's dominance could continue, putting additional pressure on currencies worldwide.

Global Markets Close Mixed on Wednesday Amid Currency Volatility and Sector Shifts

Stock markets around the world finished Wednesday's session with a mixed tone as European blue-chips posted modest gains, some Asian benchmarks saw declines, and currency indices reflected a strengthening U.S. dollar against major peers. The day's trading was marked by cautious optimism in select regions and sectors, while currency market movements hinted at shifting investor sentiment.

Canadian markets tumble on government uncertainty and U.S. stock markets plunge

Canada's benchmark S&P/TSX Composite index (^GSPTSE) dropped 562.71 points to 24,557.00, falling 2.24 per cent. Weaker commodity prices and mixed performance from financials and energy companies dragged the index lower, underscoring concerns that volatile global commodity markets could hamper Canada's resource-centric economy.

UK and European Key Benchmarks Hold Steady
In London, the FTSE 100 (^FTSE) edged higher by 3.91 points to close at 8,199.11, rising 0.05 percent.

Germany's DAX P (^GDAXI) saw a minor dip of 3.80 points to 20,242.57, down by 0.02 percent, while France's CAC 40 (^FCHI) climbed 18.92 points to reach 7,384.62, increasing by 0.26 percent.

The EURO STOXX 50 I (^STOXX50E) gained 14.70 points, closing at 4,957.28 with a 0.30percent uptick.

Elsewhere, the Euronext 100 Index (^N100) advanced 5.17 points to 1,460.65, up 0.36percent, and Belgium's BEL 20 (^BFX) rose by 10.94 points to 4,251.38, marking a 0.26percent gain.

Asian Markets Show Divergence
Hong Kong's Hang Seng Index (^HSI) led some of the region's gainers, rising 164.07 points to finish at 19,864.55, up 0.83 percent.

Over in China, the SSE Composite Index (000001.SS) rose by 20.72 points to 3,382.21, marking a 0.62 percent increase.

Japan's Nikkei 225 (^N225) declined 282.97 points to 39,081.71, slipping 0.72 percent, as the Japanese Yen Currency Index (^XDN) also weakened

Singapore's STI Index (^STI) slipped 20.31 points to 3,779.62, down 0.53 percent.

India's S&P BSE SENSEX (^BSESN) shed 502.25 points to close at 80,182.20, falling 0.62 percent.

Meanwhile, Malaysia's FTSE Bursa Malaysia KLCI (^KLSE) rose slightly, up 2.25 points to 1,599.58 for a 0.14 percent increase, while South Korea's KOSPI Composite (^KS11) rallied, adding 27.62 points to 2,484.43, a 1.12 percent rise.

Taiwan's TWSE (^TWII) climbed 150.66 points to 23,168.67, up 0.65 percent.

In the Oceania region, Australia's S&P/ASX 200 (^AXJO) moved 4.60 points lower to 8,309.40, losing 0.06 percent. Its broader counterpart, the Australian ALL ORDINARIES (^AORD), remained unchanged at 8,558.60, showing a flat 0.00percent performance.

New Zealand's S&P/NZX 50 Index (^NZ50) lost 48.75 points to 12,865.55, down 0.38 percent

In the Middle East, Israel's TA-125 (^TA125.TA) increased by 13.12 points to close at 2,423.34, a 0.54 percent gain.

In Egypt, the EGX 30 Price Return Index (^CASE30) dropped 98.50 points to 30,503.10, down 0.32 percent.

On the African continent, South Africa's Top 40 USD Net TRI Index (^JN0U.JO) nudged up 6.40 points to 4,580.69, a 0.14percent improvement.

Looking Ahead
While European equities largely maintained their footing, the currency markets and selective Asian declines highlight a cautious stance among traders. The interplay of strong U.S. dollar performance and mixed regional index outcomes suggests markets may remain sensitive to interest rate updates and global economic indicators in the sessions ahead.