US stocks mostly gave up early gains after the Federal Reserve left official rates on hold and pushed back against expectations of a September cut.
The S&P 500 shed pre-Fed gains of around 0.4% to finish 0.12% in the red for a second-straight loss. The Dow sank 172 points or 0.38%. The Nasdaq Composite mounted a partial rebound for a gain of 0.15%.
Stocks retreated and the US dollar and treasury yields rallied after the Fed left the federal funds rate unchanged at a range of 4.25% - 4.5% and indicated a September cut was by no means a certainty, despite intense political pressure from the White House. The Federal Open Market Committee voted 9-2 in favour of leaving rates unchanged. The dissenting votes came from Governor Christopher Waller and Michelle Bowman, both seen as candidates to replace Chair Jerome Powell when his term ends this year.
The odds on a September rate cut fell from around 64% to 46% as Powell told a press conference the central bank had "made no decisions" about lowering rates when it next meets. “We have made no decisions about September,” he said. “We don’t do that in advance. We’ll be taking that information into consideration and all the other information we get as we make our decision.” “Our obligation is to keep longer term inflation expectations well anchored and to prevent a one time increase in the price level from becoming an ongoing inflation problem,” he added.
Stocks rose before the afternoon rates announcement after Q2 economic growth figures came in stronger than expected. Gross domestic product expanded 3%, smashing expectations of growth of 2.3%.
Also making news: President Donald Trump announced India faced a tariff of 25% starting tomorrow night. “Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” Trump posted on Truth Social.
US stock futures rebounded in recent after-hours trade following after-market quarterly updates from index heavyweights Microsoft and Meta. S&P 500 futures were lately up 0.3%, which could reduce any ASX weakness this session.
Materials was the worst-performing S&P sector overnight, tumbling 1.99%. Real estate and energy also sank more than 1%. Three sectors resisted the sinking tide: utilities +0.69%, tech +0.43% and communication services +0.14%.
The Australian dollar slumped around 1.2% as the prospect of higher-US-rates-for-longer lifted the US dollar index more than 1%. The Aussie was lately trading 1.19% lower at 64.35 US cents, down from above 65 US cents yesterday.
US copper futures plunged after the Trump administration announced its 50% tariff on copper imports excluded ores, concentrates and cathodes. President Donald Trump said the tariff that starts tomorrow would apply to copper pipes and wiring, not raw materials or scrap metal. US copper futures were lately down 17.63% on Comex, surrendering much of the premium over other international copper benchmarks that had swollen since the initial tariff announcement. "The newly announced copper tariffs are far from universal tariffs that markets were concerned about," Gracelin Baskarin, director of the critical minerals security program at the Center for Strategic and International Studies, told Reuters. "It's less punitive than markets initially expected." BHP and Rio Tinto extended losses in US trade following the announcement. Earlier, benchmark copper on the London Metal Exchange eased 0.69% to US$9,730 per metric ton during a generally soft night for industrial metals.
Gold sank more than 1.5% as robust US economic data, a surging greenback and a US rates-hold dulled demand for assets that do not offer a yield. Spot gold was lately down US$52.64 or 1.58% to US$3,273.75 an ounce. Earlier, gold futures settled US$28.40 or 0.8% lower at US$3,352.80. Silver, platinum and palladium also declined.
Oil rose for a third day as better-than-expected US economic growth figures fuelled a rally ignited a few days ago by White House threats to slap Moscow with stronger sanctions. Brent crude settled 73 US cents or 1% ahead at US$73.24 a barrel. The US crude benchmark gained 1.1%.
Iron ore fell as US-China trade talks ended on an uncertain note, and hopes for additional China stimulus measures took a hit. Two days of US-China negotiations in Stockholm ended without a deal or confirmation that the White House will extend next month's deadline to reach an agreement. Meanwhile, sate media reporting on China's July Politburo meeting said Beijing would keep policy stable, but did not announce any specific actions, dashing hopes for new measures to support the struggling property market. Benchmark ore on the Dalian Commodity Exchange ended daytime trade with a loss of 0.44% at US$109.95 per metric ton. The Singapore ore benchmark eased 0.91% to US$101.80.
