Fed rate decision lifts US markets as S&P 500 hits 7 000

US equity markets nudged higher on Wednesday after the Federal Reserve (Fed) opted to hold interest rates steady at 3.50%–3.75%, as expected following last year’s three cuts that took borrowing costs down to their lowest since 2022. Governors Stephen Miran and Christopher Waller dissented, each favouring a further 0.25 percentage point reduction, while policymakers noted robust economic growth, modest job gains, stabilising unemployment, and elevated inflation amid high uncertainty, pledging data-driven moves ahead.

The S&P 500 briefly touched 7 000 for the first time ever, while the Dow eked out small gains and the Nasdaq 100 rose 0.40%. Texas Instruments surged 8% after surpassing Wall Street estimates, lifting semis like Micron and Intel, which jumped 6–12%, further bolstered by robust ASML orders. Microsoft, Meta and Tesla stayed flat ahead of their after-hours earnings. Elsewhere, Starbucks leapt 6% and AT&T climbed 5% on strong results.

Commodities benefitted from the Fed’s pause with gold advancing more than 2% to nearly $5 300 per ounce, moving further into record territory amid a softer US dollar and ongoing policy uncertainty. The rally accelerated after President Donald Trump downplayed concerns over the dollar’s decline to four-year lows, signalling acceptance of a weaker currency, while tariff tensions and renewed scrutiny of Fed independence added to geopolitical and macroeconomic pressures. Silver remained near $115 per ounce, reaching fresh record highs as safe-haven demand coincided with strong physical and retail buying. Platinum rose 2.65%, while Brent crude gained 0.62%, trading at $67.99 per barrel.

In Europe, the Central Bank's (ECB) Governing Council member Martin Kocher cautioned that sustained euro strength could reopen the door to further interest-rate cuts. The ECB is due to announce its next policy decision next week and is widely expected to leave rates unchanged. In earlier trade, equities closed lower driven by sharp declines in the luxury and pharmaceutical sectors following earnings disappointments. The pan-European STOXX 600 fell 0.70% to 609, while the Eurozone STOXX 50 declined 0.90% to 5 940 and Germany’s DAX slipped 0.80% to 19 285. London’s FTSE 100 also edged lower as weakness in healthcare and banking stocks outweighed gains in the energy sector.

LVMH led the sell-off, plunging 7.30% on weak results and warnings of a challenging 2026 operating environment, dragging Hermès down 2.98% and Burberry 4.98%. Pharmaceutical stocks added further pressure, while UK banks also weighed on sentiment. ASML gave back early gains to close 1.70% lower despite solid quarterly figures, with mining and energy stocks providing only limited support.

South African markets advanced, with the JSE All Share rising 1.34%, the Top 40 gaining 1.49%, and the Industrial 25 surging 4.96%. The JSE Metals and Mining index led the gains, climbing 5.46%. Investors now turn their attention to the forthcoming local interest rate decision, which will provide further insight into the country’s economic outlook. The rand weakened against the US dollar, falling 0.27%, while strengthening slightly against the pound and the euro, rising 0.09% and 0.56%, respectively.

Asian equities were broadly higher, with the Nikkei edging up 0.05%, the Hang Seng surging 2.39%, and the Shanghai Composite gaining 0.18%.