FOMC pause sees Powell push back

A mixed start for European markets has seen the FTSE 100 push higher despite the downbeat tone scene for the DAX. On a day largely devoid of any particular big ticket economic releases, traders will be casting an eye back to yesterday’s US session for guidance over sentiment today. For the FTSE 100, the strong commodity components of the index once again provides the basis for strength, with the likes of Anglo-American, Glencore, Rio Tinto, and Antofagasta all pushing higher off the back of surging precious metals and copper prices. Notably, this week has also brought gains in the energy space, with US crude prices breaking through the $64 mark for the first time in four-months. This has helped provide the basis for renewed calls of hope of a break higher for the oil & gas sector, with earnings from Chevron and ExxonMobil bringing fresh insights tomorrow.

Yesterday’s FOMC meeting gave little room for optimism that Powell would push for a rate cut in the months ahead, despite two members calling for a 25bp move this time around. Powell took this opportunity to push back against Trump, stating that the current inflation problem is a result of tariffs. Whilst that means we are likely to see this one-time impact fade over time, we are unlikely to see it move enough to justify a rate cut before Powell leaves in May. With markets currently pricing a base case scenario that the Fed cuts rates in June, there is a hope that the group will become more proactive once Powell leaves office.

Today’s Apple earnings come hot off the heels of yesterday’s trio of Meta, Microsoft and Tesla reports. Coming after the close, today’s open will have a particular focus on those three stocks. Microsoft is the big news story, with the stock falling 6% after hours despite beating market estimates on both the top and bottom line. This comes as a result of concerns around slow cloud computing growth and weak returns on their recent AI investments. Today’s Apple earnings will undoubtedly centre around iPhone sales given their central position for the company’s revenues. Nonetheless, the high-margin services segment looks to be a major area of earnings growth, with products such as App Store, Apple Music, iCloud, Apple TV+, and Apple Fitness+ providing recurring revenues for the firm. Many have claimed that Apple have lagged in their AI focus compared with the rest of the Mag7, meaning that investors will be watching closely for further evidence that the firm will further expand their offering for the upcoming iPhone model.