Apple Earnings, ECB Rate Decision in Focus After Fed Uncertainty

Apple is set to report earnings today after Microsoft beat revenue estimates but Tesla missed profit margin expectations, while Meta issued a weak forecast. The ECB is expected to cut rates, following the Bank of Canada's dovish signals, though tariff threats from Trump add uncertainty to the outlook. European stocks hit record highs on strong ASML results, while Asian markets had mixed performances amid Lunar New Year closures.

Equities

The FTSE 100 rose 0.3%, marking its third consecutive session of gains, supported by strength in technology and financial stocks. HSBC climbed 1.4%, Barclays added 2.4%, and NatWest increased 2.3% as the banking sector advanced.

The insurance sector also performed well, rising 2.7%. Dowlais Group surged 7.5% after U.S. auto parts manufacturer American Axle announced a cash-and-stock deal to acquire GKN Automotive, valuing the London-listed company at £1.16 billion.

Diageo fell 2.6% following weaker-than-expected results from LVMH, in which it holds a stake through Moët Hennessy. Fresnillo gained 2.7% after reporting full-year gold production slightly above market expectations. Meanwhile, the pound edged lower after Finance Minister Rachel Reeves outlined plans to reset economic ties with the European Union and the United States.

In the United States, the S&P 500 and Nasdaq both fell 0.5%, while the Dow Jones declined 0.3%. Technology stocks led the losses, with Nvidia dropping 4.1% and Microsoft falling 1.1%. The sector came under pressure following the launch of AI models by Chinese startup DeepSeek, which claimed its technology was cost-effective and functioned on less advanced chips than those used by OpenAI.

The Federal Reserve kept interest rates unchanged, as widely expected, and removed previous language suggesting inflation was making progress towards its 2% target. Markets initially fell further following the Fed’s statement but recovered some ground after Chair Jerome Powell reassured investors that monetary policy remained well-positioned.

Microsoft shares declined 1.5% in after-hours trading after reporting slower-than-expected growth in its Azure cloud division, despite exceeding overall revenue estimates. Elsewhere, F5 gained 11.4% after forecasting second-quarter revenue above expectations and posting better-than-anticipated first-quarter results.

Forex & Commodities

The US dollar strengthened against the Japanese yen, rising 0.6%, and gained 0.2% on the Swiss franc. The euro declined 0.6%, reversing gains made during Monday’s risk-off sentiment. Investor focus remained on trade tensions, with the White House reaffirming that US President Donald Trump plans to impose 25% tariffs on Canada and Mexico on Saturday. Treasury yields remained steady, with the 10-year yield at 4.538%.

Gold prices held steady at $2,761.93 per ounce in early Wednesday trading, recovering from Monday’s selloff when investors liquidated bullion to cover losses from sharp declines in technology stocks. US gold futures inched up 0.1% to $2,769.80.

Brent crude oil edged down 0.1% to $77.42 per barrel, while US crude futures slipped to $73.70 per barrel. US crude and gasoline inventories increased, according to API data, while distillate stocks declined. Market sentiment was also affected by Libya’s National Oil Corp confirming normal export operations following talks with protestors. Additional pressure on oil prices stemmed from concerns over Trump’s energy policies, which aim to boost US production. The White House reaffirmed plans to introduce 25% tariffs on imports from Canada and Mexico on Saturday, but the potential impact on oil flows remains uncertain. Canada supplied nearly half of US oil imports in 2023, with Mexico contributing 733,000 barrels per day.