Rates Unchanged, But Outlook Remains Cautious

U.S. stock indexes rose on Wednesday after the Federal Reserve made an expected decision to leave its benchmark interest rate unchanged, amid ongoing assessments of the impact of President Donald Trump's tariff policies on the economy and inflation.

The Fed kept the overnight rate in the range of 4.25%-4.50%, maintaining its previously announced forecast of two rate cuts of a quarter percentage point during the year. This forecast is in line with the previous expectations voiced three months ago. In addition, the regulator noted the slowdown in economic growth and the projected increase in inflation.

Disagreements within the Fed: what next?

The Fed leadership has not reached a consensus on the next steps. A high level of uncertainty remains, which highlights the difficulty of decision-making in an unstable and changing economic environment. The main question remains: how to effectively counter the effects of Trump's trade policy?

Slowing the pace of balance sheet reduction

Another important step was the Fed's announcement that it was slowing the pace of its own balance sheet reduction, which remains large. This decision was due to difficulties in assessing market liquidity, exacerbated by the protracted political impasse in the US Congress over raising the debt limit.

Investors expect a rate cut

Despite the official retention of the current rate, market participants are still confident in its upcoming reduction. According to LSEG, the probability that the Fed will cut the rate by 25 basis points in June is estimated at 62.2%. In addition, investors expect at least two similar cuts before the end of the year.

The stock market responded positively to the regulator's statements, but questions remain about the pace of the economic slowdown and the Fed's further actions. Investors continue to closely monitor the signals from the central bank, expecting new clues about future monetary policy.

Indices confidently go up

The leading US stock indices ended the day with confident growth amid the decisions of the Federal Reserve. The Dow Jones Industrial Average added 383.32 points (+0.92%) and reached 41,964.63. The S&P 500 also showed positive dynamics, rising by 60.63 points (+1.08%) to 5,675.29. The technology-heavy Nasdaq Composite strengthened even more, increasing by 246.67 points (+1.41%) and reaching 17,750.79.

Investors positively perceived the statements of the head of the Federal Reserve, Jerome Powell, who noted that it is too early to draw conclusions about the impact of new US tariffs on inflation. He emphasized that it is still difficult to determine the exact impact of these measures on price growth.

Europe is preparing for retaliatory measures

Meanwhile, the European Union announced a tightening of steel import quotas, limiting supplies by another 15% from April. This step is aimed at protecting the European market from the influx of cheap steel, which may intensify after the introduction of new US tariffs. EU decision highlights growing tensions in global trade and possible increased protectionism.

Boeing on a high: the company's shares soar

Boeing (BA.N) shares demonstrated particularly impressive growth. The aircraft manufacturer's shares rose by 6.84% after the management said that the tariffs imposed will not have a significant short-term impact on the business. This optimism supported the positive sentiment of investors, helping to strengthen the overall market momentum.

All eyes on Trump: investors await new statements

Experts note that the further behavior of the markets largely depends on Donald Trump's comments on trade barriers expected on April 2. Any new statements could affect the dynamics of stock indices and set the tone for further developments.

All S&P 500 Sectors Gain

The rally affected all 11 key sectors of the S&P 500 index. The biggest gainers were consumer discretionary stocks (.SPLRCD), which rose almost 2%. This shows high investor confidence in consumer demand despite the ongoing economic uncertainty.

Thus, stock markets continue to follow a positive trend, relying on the Fed's decisions and optimism in the corporate sector. However, Trump's upcoming statements could become a catalyst for new moves on the stock market.

Fears of a weakening economy give way to optimism

In recent weeks, US stock markets have faced a wave of sell-offs. Investors have responded to alarming economic signals indicating a possible slowdown in economic growth and a deterioration in consumer sentiment. However, despite the recent turbulence, stock indices have begun to show signs of stabilization, with growth observed in three of the last four trading sessions. This may indicate that the markets have reached a local bottom.

General Mills Cuts Forecast, Shares Fall

A number of large companies are forced to revise their financial expectations. The latest example was General Mills (GIS.N), the owner of the Pillsbury brand, which lowered its forecast for annual sales. This negatively affected the company's quotes: shares lost 2.05%. Analysts note that the adjustment of profit expectations by corporations may continue, especially against the backdrop of uncertainty in US trade policy.

S&P 500 and Nasdaq confirm correction

The benchmark S&P 500 index (.SPX) has officially confirmed that it is in a correction phase after falling 10% from recent highs. The tech-heavy Nasdaq (.IXIC) has demonstrated similar dynamics, having recorded a correction on March 6. At the same time, the Dow Jones index, consisting of shares of the largest companies, is holding up better and remains only 3% from the correction level.

Gold at all-time highs: investors seek protection

In conditions of instability, demand for safe-haven assets traditionally grows, and gold is no exception. On Thursday, the precious metal updated its all-time high amid signals from the Federal Reserve about a possible two-fold reduction in interest rates this year. This has increased the appeal of gold for investors seeking refuge from economic and geopolitical uncertainty.

As of 07:00 GMT, spot gold was trading at $3,047.10 an ounce, little changed after hitting a new record of $3,057.21 earlier in the session.

What's next? Investors weigh the outlook

Markets continue to struggle to balance economic worries with hopes for support from the Federal Reserve. Investors are keeping a close eye on corporate earnings and new economic data that could influence the direction of stock indices and commodity markets.

Futures on the rise again

Precious metals are showing solid gains, with U.S. gold futures up 0.4% to $3,054.10 an ounce. Investors continue to increase their holdings in the asset, seeing it as a reliable way to protect capital in uncertain times.

Trump's policy and its impact on the economy

Fed Chairman Jerome Powell noted in his statement that Donald Trump's tariff policy has led to a slowdown in economic growth and an increase in inflation, albeit temporarily. The introduction of duties increased the cost of imports, which contributed to the acceleration of inflation and the rise in prices for goods.

Economists warn that trade barriers imposed by Washington could negatively affect the long-term prospects of the US economy. Escalating trade tensions are also seen as a factor weighing on businesses and investment markets.

Other Precious Metals: Mixed Performance

Aside from gold, other metals also showed mixed performance.

• Silver remained relatively flat at $33.80 per ounce;

• Platinum fell 0.3% to $989.85;

• Palladium fell 1% to $949.50.

These swings show that while gold remains a favorite among investors, other metals are feeling the pressure from market factors.

Market Reversal: Brent Underperforms Dubai Swaps

Brent crude futures fell against Dubai swaps for the first time since November 2023, fresh data from LSEG shows, highlighting the growing influence of Middle Eastern high-sulphur crudes over traditionally more expensive sweet crudes containing fewer impurities.

According to a report published on Wednesday, the difference between Brent futures and Dubai swaps was minus 2 cents a barrel at the close of trading at 04:30 GMT. However, by the end of the day, the discount had widened to 14 cents, confirming a shift in the balance of supply and demand.

Why is Middle East crude winning?

Experts say the growing demand for Dubai crude is due to active buying by major trading houses, which is supporting the regional benchmark.

"We see sustained interest in Middle East crude from major players, which is pushing prices higher," said Harry Chilligourian, head of research at Onyx Capital Group.

The situation with Brent is different: demand for it remains weak, as European refineries have not yet completed seasonal maintenance, and refining margins in Northwest Europe remain low. This reduces the attractiveness of buying more expensive and lighter oil.

Russia makes concessions: how does this affect prices?

Another factor putting pressure on Brent was the unexpected agreement between Russia and the United States. Moscow accepted Donald Trump's offer to temporarily stop attacks on energy infrastructure as part of the conflict with Ukraine.

This move could facilitate the export of Russian oil, which would potentially increase its supply on the world market. If Russian oil flows do expand, this will intensify competition among suppliers and could further reduce Brent quotes.

What to expect next?

The dynamics of the oil market remain volatile. While demand for Middle Eastern grades is strengthening, Brent faces short-term challenges including:

• low refining margins in Europe;

• slower purchasing by refineries;

• possible increase in Russian crude supply.

Investors continue to closely monitor developments, as any changes in trade flows could significantly impact future price movements.