The Fed cut rates by 25 basis points, bringing them down to a range of 3.50% to 3.75%. In his remarks, the institution's chairman described the move as balanced: it addresses recent concerns about the labour market without undermining the central bank's ability to act should imbalances emerge in forthcoming data. Jerome Powell repeatedly stressed that the Fed remains appropriately positioned, while simultaneously upgrading the 2026 US growth forecast and noting the relatively cautious outlook among FOMC members regarding further easing. The market drew one key conclusion from these signals: the US central bank is likely to cut rates just once next year.

The Fed's stance was precisely what the market had anticipated, easing the slight pressure that had been weighing on indices recently. It also responded to the palpable tension around liquidity by launching a flexible programme of Treasury bond purchases, which some economists are already likening to a mini-quantitative easing scheme: a term beloved of financiers.

On Wall Street, the S&P 500 gained 0.7%, accelerating during Powell's press conference. Equity markets were thus given the reassurance they had been hoping for. The dollar fell modestly, indicating that the rate cut is still perceived as restrictive. The bond market largely took note without overreacting: the yield on 10-year US debt remained above 4.1%. As previously noted here, a rate cut would normally lead to a mechanical drop in yields. That this hasn't occurred signals the market's understanding that the Fed has no short-term plans to continue easing. Most FOMC members share this outlook. The only notable dissent came from newcomer Stephen Miran, who voted for a 50-basis-point cut in December and supports the White House's position advocating for a dramatic reduction in rates. The decision passed by nine votes to three, with the two other dissenters favouring a hold. Non-voting members, for their part, expressed marked reluctance towards rate cuts through their forecasts. As one seasoned market observer put it: the market chose to ignore the clear hawkishness of most Fed members, focusing instead on Powell's relatively relaxed tone, and betting that his expected replacement in May will usher in a more dovish approach.

The Fed Fiesta, however, was spoiled by figures released by Oracle after the close. Larry Ellison's company has been on investors' watchlists since it embarked on a bold pivot to AI, spending lavishly and promoting aggressively the billions in customer commitments it claims to have secured. Disappointing revenues from the company’s cloud division suggest there is still a long way to go. The announcement, which sent shares down 11.5% in after-hours trading, also rattled Oracle’s already overheated debt market. More broadly, it has deepened the sense that something may be rotten in the kingdom of AI.

In the Asia-Pacific region, Oracle quickly overshadowed the Fed. Japan, South Korea, China and Taiwan all declined, dragged down by their tech stocks. India, often moving counter to the regional trend, and Australia, where the tech sector is relatively slim, managed modest gains. Western futures markets have also turned down. They are sharply lower in the US and somewhat less so in Europe.

Today's economic highlights: 

On today's agenda: the Swiss National Bank's policy rate decision; In the United States, new unemployment claims and the final demand of the Producer Price Index for September. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,211.6
  • Crude Oil (BRENT): US$61.74
  • United States 10 years: 4.13%
  • BITCOIN: US$91,416.09

In corporate news:

  • Prudential faces volatility due to the U.S. Federal Reserve interest rate decision and its stake sale ahead of the ICICI Prudential Asset Management IPO.
  • BAE Systems Fast Labs awarded a $16 million contract by DARPA.
  • John Wood Group divested its UK transmission and distribution business to United Infrastructure for £57.5 million.
  • WH Ireland reported a high-yield revenue of £4.2 million despite a decline in revenue and AUM ahead of its acquisition.
  • Minoan Group entered into a conditional share purchase agreement with DAGG LLP for the acquisition and disposal of its subsidiary Loyalward Ltd.
  • CVC appointed Peter Rutland as President and Soren Vestergaard-Poulsen as Chief Investment Officer for its Private Equity Division.
  • Zealand Pharma announced its 2030 strategic roadmap for metabolic drug development, including a collaboration with OTR Therapeutics.
  • Brunello Cucinelli raised its revenue growth forecast for 2025 to 11-12% at constant currency rates and initiated a partial buyback program.
  • Temu faced an EU raid on its Dublin office and Irish distribution center over potential Chinese subsidies.
  • Aker BP downgraded to Underweight by JP Morgan, with a price target of 226 NOK.
  • Amazon settled a tax probe in Italy, expanded same-day grocery delivery to 2,300 cities, and is developing orbital AI data centers with Blue Origin and SpaceX.
  • Pfizer plans to eliminate over 200 jobs in Switzerland as part of a workforce cost reduction initiative.
  • Microsoft announced partnerships to boost agentic AI adoption amid challenges faced by OpenAI.
  • Intel explores acquisitions of Rivos and Sambanova, while facing governance concerns and a reduced EU antitrust fine.
  • Oracle warned about AI profitability, impacting tech stocks and risk appetite, despite strong demand in cloud-AI.

See more news from UK listed companies here

Analyst Recommendations:

  • Informa Plc: Investec maintains its hold recommendation and reduces the target price from GBX 975 to GBX 950.
  • J Sainsbury Plc: BNP Paribas upgrades to outperform from neutral with a price target raised from GBX 324.06 to GBX 375.
  • Travis Perkins Plc: Deutsche Bank downgrades to sell from buy and reduces the target price from GBX 650 to GBX 530.
  • Flutter Entertainment Plc: Citizens maintains its market outperform recommendation and reduces the target price from USD 345 to USD 311.
  • Astrazeneca Plc: Rothschild & Co Redburn maintains its buy recommendation and raises the target price from GBX 17800 to GBX 18100.
  • Tesco Plc: BNP Paribas maintains its outperform recommendation and raises the target price from USD 20.50 to USD 21.
  • Unilever Plc: ING Bank downgrades to hold from buy and reduces the target price from EUR 58.90 to EUR 52.
  • J Sainsbury Plc: Citi upgrades to buy from neutral with a price target raised from GBP 3.33 to GBP 3.49.
  • B&M European Value Retail S.a.: Citi downgrades to neutral from buy and reduces the target price from GBP 2.15 to GBP 1.65.
  • Baltic Classifieds Group Plc: Peel Hunt maintains its buy recommendation and reduces the target price from GBP 3.35 to GBP 3.05.
  • Ocado Group Plc: Bernstein maintains its underperform recommendation and reduces the target price from GBX 170 to GBX 100.
  • Legal & General Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 3.30 to GBP 3.40.
  • Diageo Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 24.70 to GBP 26.50.