Asian markets were mixed in early trading, with Tokyo up about 1.9% and Seoul’s Kospi gaining 1.6%, while Hong Kong fell 1.8% and Shanghai slipped 0.1%. U.S. futures were pointing higher by as much as 1%, suggesting a partial recovery after Wall Street’s sharp drop the previous session.
New York stocks fell on Wednesday after the first rate decision under Kevin Warsh. The Fed kept rates unchanged at 3.75%, as expected, but the new chair struck a notably hawkish tone. The Nasdaq and S&P 500 each lost 1.3%, while the Dow Jones fell 1% after three straight record closes. The Fed’s median projection for the end of 2026 rose to 3.8%, reinforcing expectations that rates will stay elevated for longer and possibly rise again.
Rate-sensitive sectors sold off, especially cyclical consumer stocks, basic consumer names, and real estate, while technology held up better. The megacap group also weakened, led by Meta, Amazon, and Microsoft. Chip shares bucked the trend, with SOXX rising 3%. Intel advanced after reports that it began commercial production of its advanced 18A-P process, bringing it closer to a manufacturing deal with Apple. ASML and Micron also rose. SpaceX slipped about 5% after its post-IPO rally, though it is still up roughly 40% from its $135 IPO price. Rocket Lab and Virgin Galactic surged, and Robinhood climbed after Deutsche Bank raised its price target to $105 and kept a buy rating.
Bond yields jumped on the Fed’s message, erasing bets on near-term rate cuts. The 10-year Treasury yield rose to 4.47% from 4.43%, and the 2-year yield, which is more sensitive to policy expectations, climbed to 4.14% from 4.06%. In commodities, oil was stable on Wednesday near a three-month low below $80 a barrel, but later fell to $78 after reports that President Donald Trump signed a deal with Iranian President Masoud Pezeshkian to end the war in the Middle East. Goldman Sachs cut its Brent forecast for the fourth quarter to $80 from $90 and lowered its 2027 average forecast to $75 from $80, saying Gulf exports should return to prewar levels by the end of July. The dollar index rose 0.15% to 100.017, Bitcoin fell 0.64% to around $63,834, and markets were watching the Bank of England decision at 2:00 p.m. and two U.S. data releases at 3:30 p.m., initial jobless claims and the Philadelphia Fed manufacturing index.
