Dollar rises as Fed Chair signals December rate cut not guaranteed

Following the central bank’s widely expected quarter-percentage-point cut, Federal Reserve Chair Jerome Powell told reporters that another decrease in December “is not a foregone conclusion, far from it.”

Market reaction and Wall Street performance

Powell’s remarks unsettled US markets, driving the dollar higher and briefly pushing all three major US equity indices into negative territory.

The Nasdaq later rebounded, closing at a fourth consecutive record high, fuelled by further gains from artificial intelligence giant Nvidia, which became the first company to reach a $5 trillion market value.

The Dow Jones Industrial Average ended slightly lower, while the S&P 500 finished virtually unchanged.

Analysts’ response and economic outlook

According to Oxford Economics, Powell’s tone was “hawkish,” with the firm predicting that the Fed would “move to the sidelines” and avoid another cut until March.

Powell also noted that the ongoing US government shutdown has led to a shortage of economic data, which could prompt a more cautious approach to policy-making.

Global market sentiment and trade developments

Earlier in the day, the Dow surpassed 48,000 points, following record peaks in London and several Asian markets, as US President Donald Trump expressed optimism ahead of crucial trade talks with China’s President Xi Jinping.

Trump predicted a “great meeting,” while China’s Foreign Ministry took a more restrained stance, saying that Xi and Trump would hold “in-depth discussions” on “major issues.”

Key topics include Chinese exports of rare earths and US efforts to expand soybean exports to China.

Nvidia’s Surge and expectations from trade talks

Analysts have suggested that Nvidia’s latest surge is partly driven by hopes that Trump could negotiate the resumption of the company’s exports to China.

The two leaders are expected to meet on Thursday in Busan, a southern port city close to the APEC Summit, which Trump is attending.

Global Central Banks hold steady

Both the European Central Bank (ECB) and the Bank of Japan (BoJ) are expected to maintain current interest rates this week.

Benchmark indices in Tokyo and Seoul each reached record highs on Wednesday, while European markets ended mixed.

US–South Korea trade agreement

Following the market close in Seoul, the United States and South Korea reached an agreement to maintain reciprocal tariffs at 15 percent, while also reducing levies on automobiles and auto parts.

Company news highlights

In corporate updates, UK drugmaker GSK saw its shares rise by more than two percent in London after raising its full-year guidance, driven by strong sales growth.

Meanwhile, Mercedes-Benz shares gained over four percent after the company assured investors that it faced no immediate production shutdowns due to microchip shortages—despite third-quarter net profits plunging more than 30 percent amid Trump’s tariff measures and slowing Chinese sales.

Caterpillar reports strong performance

US industrial conglomerate Caterpillar surged 11.6 percent after posting better-than-expected profits, supported by robust demand in its energy and transportation division, partly linked to heavy AI infrastructure investment.