Fed Decision Awaited, Europe Closed for May Day

Equities

The FTSE 100 held steady, ending a record-breaking streak of gains by closing flat, after reaching an all-time high earlier in the day. The day concluded with the index at 8,199.95 points. The strength in the financial sector, bolstered by HSBC's positive earnings update, was counterbalanced by a downturn in metal mining stocks which felt the impact of a stronger dollar.

HSBC Holdings saw its share price surge by 4.1% following the announcement of better-than-expected pretax profits and a $3 billion share buyback programme. This positive news came alongside the announcement of CEO Noel Quinn's retirement. Hargreaves Lansdown experienced a 3.6% increase in its stock price. The investment platform reported strong client activity in April, coinciding with the start of the new tax year.

On the downside, Prudential's shares fell by 5.4% as the company reported a 17% drop in annual premium equivalent sales from its Chinese Mainland joint venture, CITIC Prudential Life, during the first quarter.

In the United States, the market faced downward pressure ahead of a key Federal Reserve policy meeting. The S&P 500 dropped by 1.56%, closing at 5,036.25 points. Similarly, the Nasdaq Composite fell by 2.00%, ending the day at 15,664.13, while the Dow Jones Industrial Average decreased by 1.47% to 37,823.57 points.

GE Healthcare saw its stock decline after missing first-quarter revenue expectations. Conversely, Eli Lilly's shares jumped following an upgrade to its annual profit forecast.

PayPal revised its full-year adjusted profit forecast upwards. This suggests a robust outlook for the company, reflected in the stock's strong reaction. On a broader scale, of the 265 companies in the S&P 500 that have reported earnings so far, 79.2% have exceeded analyst expectations.

Forex & Commodities

The US dollar strengthened against a backdrop of key economic data and central bank activities. The yen depreciated 0.88% to 157.73 per dollar following suspected ongoing market interventions by Japanese authorities. This fluctuation came despite the yen recovering from a 34-year low against the dollar earlier in the week. In Europe, the euro fell 0.42% to $1.0674, while the British pound also weakened, down 0.49% to $1.2499 against the dollar meeting amid expectations to maintain interest rates between 5.25% and 5.50%. This follows revelations that US labour costs had surged more than anticipated in the first quarter, influencing treasury yields and strengthening the dollar further. Old prices fell significantly, dropping 1.8% to $2,292.60 an ounce. Oil prices also declined, with Brent crude settling down

Financial markets are closely watching the US Federal Reserve, which concludes its two-day 0.61% at $87.86 per barrel and US West Texas Intermediate crude falling 0.85% to $81.93 per barrel.