BOJ Raises Rates, Yen Spikes, Tech Earnings Contrast

The Bank of Japan raised interest rates to 0.25%, causing volatility in the yen, which is now near a three-month high after a significant rebound. Microsoft disappointed with slow cloud growth, while AMD reported strong earnings, highlighting a divide in the AI sector. European markets will focus on the euro zone's inflation report, following slightly better-than-expected economic growth data.

Equities

The FTSE 100 closed down 0.2% on Tuesday, weighed down by losses in the beverage and mining sectors. Diageo fell 5.1% after the spirits maker reported a larger-than-expected 4.8% decline in annual organic operating profit, dragging the beverages sector down 4.2% to its lowest since November 2020. Industrial metal miners slipped around 2% due to falling base metal prices amid slowing global growth momentum.

The FTSE 250 rose nearly 1%, led by a 25% surge in St James's Place. The British wealth manager’s CEO, Mark FitzPatrick, announced a strategy update with a target to achieve nearly £500 million in cumulative savings by 2030.

Standard Chartered gained 5.9% after announcing its largest-ever share buyback worth $1.5 billion and raising its earnings outlook for the year.

In the US, the S&P 500 and Nasdaq closed lower, impacted by weak chip and megacap shares ahead of major tech earnings. The S&P 500 fell 0.5%, and the Nasdaq dropped 1.28%, while the Dow Jones Industrial Average rose 0.5%. Microsoft, seen as a leader in artificial intelligence, fell 0.89% to $422.92 before dropping another 5% after hours due to disappointing Azure cloud-computing service growth.

Nvidia, a key player in AI and the second-best performer in the S&P 500 this year, tumbled 7.04% to $103.73, affecting other chip stocks and pulling the Philadelphia semiconductor index down 3.88%. Among other tech giants, Apple edged up 0.26% to $218.80, while Amazon slipped 0.81% to $181.71, and Meta Platforms shed 0.54% to $463.19 on valuation concerns.

Procter & Gamble lost 4.84% to $161.70 after missing fourth-quarter sales expectations. Merck dropped 9.81% to $115.25 following a cut in its annual profit forecast. CrowdStrike fell 9.72% to $233.65 amid reports that Delta Air Lines sought compensation for a global cyber outage. However, F5 surged 12.99% to $200.66 after forecasting strong fourth-quarter results. The S&P 500 posted 73 new 52-week highs and one new low, while the Nasdaq recorded 133 new highs and 126 new lows.

Forex & Commodities

The MSCI global equities index fell on Tuesday, influenced by investor jitters ahead of major corporate earnings and central bank meetings. US Treasury yields dropped as markets awaited the Federal Reserve’s decision, which is expected to hold rates steady but signal a potential rate cut in September. The dollar index fell 0.03% to 104.55, while the euro dipped 0.09% to $1.0809. The Japanese yen strengthened 0.56% to 153.14 per dollar on reports of a potential rate hike by the Bank of Japan.

In commodity markets, oil prices fell over 1%, with US crude settling at $74.73 per barrel and Brent at $78.63, amid concerns over weakening demand from China. However, oil futures rebounded on Wednesday following news of Hamas leader Ismail Haniyeh’s assassination in Iran, with Brent crude rising to $80.02 a barrel and US WTI crude climbing to $76.11 a barrel.

Gold prices increased on expectations that the Federal Reserve might indicate a rate cut in September, with spot gold adding 1.04% to $2,408.32 an ounce and US gold futures gaining 1.15% to $2,405.20 an ounce.