Help
Fed holds rates and signals neutral stance; markets mixed as gold hits record high
The Federal Reserve has elected to maintain its benchmark interest rate, adopting a more neutral stance for future policy adjustments. Amidst persistent uncertainty regarding the central bank's trajectory, US equity indices finished the session mixed. However, gold futures surged to an unprecedented milestone, breaching the $5,300 threshold for the first time. In the corporate sector, Microsoft, Meta, and Tesla exceeded market expectations in their latest quarterly reports.
The Federal Reserve kept its benchmark interest rate steady at 3.75%, reaffirming a data-dependent, meeting-by-meeting framework.
The Bank of Canada maintained its policy rate at 2.25%, with Governor Tiff Macklem expressing significant concern over the potential erosion of the Fed's independence due to political pressure from the White House.
Microsoft, Meta, and Tesla surpassed consensus forecasts; however, post-market trading reflected a fragmented investor response.
Microsoft and Meta recorded robust year-on-year revenue growth of 17% and 24%, respectively, while Tesla experienced a 3% contraction during the same period.
Federal Reserve adopts neutral stance and retains "meeting-by-meeting" framework
The Federal Reserve has decided to keep its benchmark interest rate unchanged at 3.75%, shifting towards a more neutral and data-dependent stance. The decision was reached with a 10–2 vote among policymakers, who indicated a lack of urgency regarding further rate reductions. The US central bank characterised the economy as "strong and resilient," particularly in terms of GDP growth. While the Fed noted signs of stabilisation in the labour market, it maintains that inflation remains elevated and above the 2% target.
During the post-meeting press conference, Chairman Jerome Powell stated that the Federal Open Market Committee (FOMC) does not anticipate immediate policy shifts in upcoming meetings, opting instead to wait for updated economic data. The committee identified current tariff implementations, rather than domestic consumption, as the primary driver of inflationary pressure. Regarding geopolitical risks, the FOMC highlighted the possible volatility in commodity prices—specifically oil—and the inflationary threat of further tariffs. Additionally, the Fed is closely monitoring the impact of Artificial Intelligence (AI) on the workforce; while AI may bolster productivity, it could also adversely affect employment in sectors highly susceptible to automation.
Market reactions were notably mixed following the announcement. The S&P 500 edged down by 0.01% to 6,978 points, while the Dow Jones rose 0.02% to 49,015. The Nasdaq 100 outperformed its peers, gaining 0.32% to reach 26,022. Simultaneously, gold futures (GCG26) appreciated by more than 4%, closing above the $5,300 barrier, while the 10-year US Treasury yield rose slightly to 4.24%.
Figure 1. Gold Futures GCG26 (2000-2026). Source: Data from the NYSE and COMEX; Figure obtained from TradingView.
Bank of Canada holds rates and cites risks to Fed Independence
The Bank of Canada (BoC) maintained its benchmark interest rate at 2.25%, aligning with analyst expectations. This decision represents the BoC’s third consecutive hold as the central bank continues to navigate a rising unemployment rate. In his opening statement, Governor Tiff Macklem highlighted the systemic risks posed to global financial stability if the Federal Reserve’s independence were compromised by executive pressure. He identified the preservation of central bank autonomy as a critical geopolitical imperative in the current climate of high economic uncertainty.
Microsoft, Meta, and Tesla exceed forecasts; share prices react mixed
Technology giants Microsoft Corp., Meta Platforms, and Tesla Inc. released quarterly financial results that surpassed consensus estimates for both total revenue and earnings per share (EPS). Despite these beats, aftermarket trading exhibited mixed movements.
Microsoft reported total revenue of $81.27 billion, exceeding the $80.23 billion forecast, with an EPS of $4.14 against the $3.93 estimate. This reflects a year-on-year (YoY) revenue increase of 16.7% and a substantial 24% rise in EPS. Nevertheless, the shares experienced a post-market decline of over 5%.
Meta Platforms achieved revenue of $59.89 billion, surpassing the projected $58.35 billion, with an EPS of $8.88 compared to the expected $8.19. These results indicate a 23.8% YoY revenue surge and a 10.7% increase in EPS. In response, Meta’s share price climbed more than 6% in after-hours trading.
Tesla reported revenue of $24.9 billion, marginally above the $24.7 billion forecast, with an EPS of $0.50 exceeding the $0.45 estimate. Although revenue saw a 3% YoY decline and EPS fell by approximately 31% compared to the previous year, the shares appreciated by roughly 2% post-market, reflecting investor relief at the earnings beat.
