BoE Rate Cut Decision and Amazon Earnings in Focus

The Bank of England is expected to cut interest rates today, its third since the pandemic, as it balances economic stagnation and persistent inflation. Wall Street ended higher despite weak earnings from Alphabet, while Amazon faces pressure to deliver strong cloud growth after disappointing AI-driven results from Microsoft and Google. Meanwhile, US Treasury yields remain low amid uncertainty over Trump’s tariff policies, and the yen strengthens as Bank of Japan officials hint at rate hikes.

Equities

The FTSE 100 rose 0.6% on Wednesday, rebounding after two days of losses, with strong gains in GSK and gold miners leading the index higher. GSK climbed 7.6% after announcing a £2 billion share buyback and raising its long-term sales target to nearly $50 billion. Gold miners also rallied as gold prices hit a record high, with Fresnillo up 5.8% after J.P. Morgan named it its “top pick.” Meanwhile, Ferrexpo fell 8% after confirming a civil claim worth 157 billion hryvnias ($3.77 billion) had been filed against its Ukrainian unit.

In the US, all three major indices closed higher as investors balanced weak earnings from Alphabet with optimism over potential interest rate cuts from the Federal Reserve. The Dow Jones gained 0.71%, the S&P 500 added 0.39%, and the Nasdaq rose 0.19%. Alphabet dropped 7.3% after reporting weaker-than-expected cloud revenue growth and announcing a $75 billion investment in artificial intelligence.

Advanced Micro Devices fell 6.3% after CEO Lisa Su projected a 7% drop in data centre sales for the current quarter. Nvidia recovered 5.4% following last week’s selloff on concerns about competition from a low-cost Chinese AI model. Broadcom gained 4.3%.

FMC Corp plunged 33.5% after forecasting lower quarterly revenue. Uber dropped 7.6% after issuing a weak outlook for first-quarter bookings. Johnson Controls surged 11.3% after appointing Joakim Weidemanis as CEO and raising its 2025 profit forecast. Fiserv gained 7.1% as strong demand in its banking and payments unit helped it beat quarterly profit estimates.

The bond market reflected investor caution, with US Treasury yields near one-month lows. The Cboe Volatility Index, often seen as Wall Street’s fear gauge, dropped 7.9% to 15.85. Traders are now watching for the Federal Reserve’s next move, with markets expecting a rate cut in June. In the UK, attention is focused on Thursday’s Bank of England decision, with markets pricing in a 25-basis-point rate cut.

Forex & Commodities

The yen climbed to its highest level in eight weeks against the US dollar, reaching 151.81, before settling at 152.45. This followed comments from Bank of Japan board member Naoki Tamura, who advocated for interest rate hikes to at least 1% in the latter half of 2025. Investors are now pricing in a 98% chance of a rate hike by September. Meanwhile, the US dollar index remained near its lowest point since the start of last week, having retreated from a three-week high of 109.88. Sterling eased 0.2% to $1.2483 ahead of the Bank of England’s expected rate cut later today.

Gold prices continued to hold near record highs, with spot gold at $2,868.94 per ounce after reaching an all-time peak of $2,882.16. Market uncertainty surrounding US trade policies and central bank decisions has driven demand for the metal. Investors are watching for the US non-farm payrolls report on Friday, which could influence the Federal Reserve’s rate cut timeline.

Oil prices edged up slightly but remain under pressure after a sharp 2% drop on Wednesday. Brent crude rose 15 cents to $74.76 a barrel, while US West Texas Intermediate crude gained 20 cents to $71.23. A large build in US crude and gasoline inventories and new US-China trade tariffs weighed on sentiment. Saudi Aramco raised oil prices for Asian buyers, helping to stabilise the market.