|

Dow Jones futures gain ahead of Fed policy decision

  • Dow Jones futures advance despite investor caution surrounding renewed Middle East hostilities and the Fed decision.
  • US-Iran tensions flared after the US military intercepted a surprise Iranian attack aimed at American Middle East troops.
  • Fed is expected to hold rates steady, though traders see an unusually high 31.5% chance of an immediate hike.

Dow Jones futures gain 0.11% to trade around 53,000 during European trading hours on Wednesday. Meanwhile, S&P 500 futures rise 0.16% to trade near 7,480, though Nasdaq 100 futures decline 0.17%, trading near 27,870, respectively.

US index futures remain mixed as traders adopt a cautious stance amid renewed hostilities in the Middle East and the upcoming Federal Reserve (Fed) policy decision. After several days of relative calm, geopolitical tensions reignited, fueling fresh concerns over potential disruptions to global energy supplies. The escalation began when the US military reported intercepting what it described as a surprise Iranian attack targeting American troops stationed across the Middle East.

Iran-backed militias in Iraq launched drone strikes against oil facilities in Saudi Arabia’s Eastern Region for a second consecutive day, though the full extent of the damage remains unclear. It is believed to be a direct countermeasure against recent US strikes on Iranian naval assets, which triggered immediate retaliation. CENTCOM subsequently executed precision airstrikes in Iraq aimed at neutralizing Iran-backed groups planning further operations against US forces and Saudi energy infrastructure.

Meanwhile, monetary policy uncertainty continues to weigh on market sentiment ahead of the Federal Reserve's announcement. While the central bank is widely expected to leave interest rates unchanged, traders are currently pricing in an unusually high 31.5% chance of an immediate rate hike. Looking further ahead, markets are factoring in a nearly 79.0% probability of a rate increase in September, reinforcing expectations that global borrowing costs will remain elevated for longer.

During Tuesday’s US regular session, major US indices saw mixed results, with the Dow Jones and S&P 500 rising 1.03% and 0.21%, respectively, while the tech-heavy Nasdaq Composite slipped 0.22%. Ford Motor surged roughly in extended trading after exceeding financial estimates and raising its full-year 2026 outlook. Conversely, semiconductor manufacturer SK Hynix fell despite posting record quarterly profits, as the results fell short of Wall Street expectations.

Semiconductor slump deepens as Korea and Taiwan indices tumble

Analysts at Rabobank highlight that equity markets “saw divergence yesterday between semiconductor stocks and value plays,” with the tech-heavy Asian benchmarks bearing the brunt of the sell-off. They note that South Korea’s KOSPI “closed the day down 10.84% after triggering a market circuit-breaker early in the session,” underscoring the severity of the move, while Taiwan’s TAIEX index “fell by 4.65%.” This sharp underperformance of semiconductor-linked names stands in stark contrast to the relative resilience of broader value-oriented segments of the equity market.

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

More from Akhtar Faruqui
Share:

Editor's Picks

AUD/USD eyes 100-SMA hurdle near 0.7035 as hawkish RBA counters firmer USD

AUD/USD regains positive traction on Tuesday and climbs to 0.7030 during the Asian session, reversing the previous day's corrective slide from a one-month high as hawkish RBA rate expectations continue to support the Aussie. Spot prices, however, remain below the 100-day SMA pivotal resistance amid a firmer US Dollar as traders brace for Australia’s September CPI report on Wednesday ahead of the Fed rate decision.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold holds above $4,000 as traders brace for Fed interest rate decision

Gold edges higher during American trading hours on Tuesday after trading in negative territory earlier in the day. A slight decline in Oil prices offers some relief, although a firmer USD limits the upside as traders await the Fed’s monetary policy announcement on Wednesday.

Crypto Today: Bitcoin, Ethereum and XRP on edge as sell-side pressure intensifies

Cryptocurrency prices are broadly correcting on Tuesday, led by Bitcoin (BTC) edging lower below the pivotal $80,000 level. Ethereum (ETH) mirrors Bitcoin’s neutral-to-bearish outlook, while Ripple (XRP) hovers around $1.30.

Experts agree: Fed policy outlook and geopolitical tensions keep US Dollar bid

The US Dollar Index rallies 0.6% in three days and hits fresh two-week highs above 102.00. Investors return to the US Dollar as markets brace for a hawkish hold by the Fed on Wednesday. Waning hopes of any immediate US-Iran peace deal have provided additional support to the safe-haven USD.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.