Closing Recap 

U.S. stock markets edged to new records on Tuesday, but the gains were highly concentrated in a handful of mega-cap technology names. An AI-fueled rally in the “Magnificent 7” masked weakness across most other sectors, with the equal-weighted S&P 500 actually finishing lower. This narrow leadership highlights growing investor caution ahead of today’s pivotal Federal Reserve decision. In the currency markets, the dollar held steady, but the Australian dollar was the standout performer, surging after hot inflation data effectively ended hopes for a near-term RBA rate cut. In contrast, the British pound tumbled on growing expectations of a Bank of England rate cut. The risk-on mood in tech did little to support commodities, as gold continued its slide below the key $4,000 level and WTI crude oil fell for a fourth straight day to near $60 per barrel. 

Key Takeaways 

• Tech-Fueled Records, Poor Breadth: The S&P 500 and Nasdaq hit new highs, but the rally was driven almost exclusively by mega-cap tech, signaling a lack of broad market participation. 
• All Eyes on the Fed: The market is in a holding pattern ahead of today’s FOMC decision, with a 25-basis-point rate cut widely expected. The focus will be on Chair Powell’s forward guidance. 
• U.S.-China Trade Optimism Builds: Positive rhetoric from President Trump is boosting sentiment ahead of his meeting with President Xi, though the Chinese side remains more measured in its tone. 
• Aussie Dollar Soars as Hot CPI Kills Rate Cut Bets: The Australian Dollar is the standout performer in G10 FX, surging after a shockingly hot Q3 inflation report completely wiped out expectations for a Reserve Bank of Australia rate cut in November. Conversely, GBP fell sharply after Goldman Sachs forecasted a BoE rate cut in November. 
• Gold Slides Below $4,000: The precious metal extended its decline, settling below the psychological $4,000 mark as improving trade sentiment and pre-Fed positioning weighed on prices. 
• Bitcoin Dips Below $113k: The leading cryptocurrency saw a sharp drop to below $113,000 as traders de-risked ahead of the high-impact central bank announcements. 
• FOMC Decision is the Main Event: Today’s trading will be dominated by the Federal Reserve’s policy announcement and subsequent press conference, with major tech earnings from Meta, Microsoft, and Alphabet due after the close.

Market Overview

The brief period of market anxiety is already a distant memory. U.S. stocks opened strong on Tuesday and grinded relentlessly higher throughout the session, with the S&P 500, Dow, and Nasdaq all closing at fresh all-time highs. The “buy the dip” mentality was on full display as investors shrugged off the previous week’s regional bank scare and trade war jitters, piling back into the market’s leaders. A powerful rally in AI-related mega-cap stocks was the sole driver, a fact underscored by the Technology sector (XLK) being the only ETF to outperform the S&P 500 over the past five days. This narrow leadership suggests that while optimism abounds for a few key players, the broader market is hesitant, a sentiment reflected in the Fear & Greed Index which remains in the “Fear” zone despite the record highs. 

Index	Up/Down	% Change	Last
DJ Industrials	161.78	0.0034	47706
S&P 500	15.76	0.0023	6890
Nasdaq	190.04	0.008	23827
Russell 2000	-13.79	-0.0055	2506

This cautious mood is understandable. Traders are bracing for a critical 24 hours, headlined by the Federal Reserve’s interest rate decision. A 25bps cut is seen as a done deal. The real uncertainty lies in Chair Powell’s commentary and whether he will signal a definitive pause or leave the door open for another cut in December. The ongoing government shutdown, now on Day 28, complicates the Fed’s job by withholding key economic data. 

Adding another layer of complexity is the upcoming meeting between Presidents Trump and Xi. While Trump has sounded highly optimistic about securing a “great deal,” the market has been down this road before. The more reserved commentary from Beijing suggests that any agreement may be more about maintaining the current truce than a comprehensive resolution, similar to the short-lived “Phase One” deal of the past.

Economic Calendar 

With the U.S. government shutdown continuing, official data remains scarce. The market is leaning heavily on private surveys, regional Fed reports, and central bank commentary for direction, but some private and agency data was released, showing a slight uptick in consumer confidence and continued softness in the housing market. Data released earlier / overnight: 

• Australian Q3 CPI: A major upside surprise. Trimmed mean CPI rose +1.0% q/q (vs. 0.8% exp) and +3.0% y/y (vs. 2.7% exp). This reading was well above the RBA’s own forecasts and has completely priced out a November rate cut. 
• U.S. Consumer Confidence (Oct): Came in at 94.6, slightly beating the 93.4 estimate, showing resilience among consumers. 
• U.S. S&P Case-Shiller Home Prices (Aug): Rose +1.6% y/y, stronger than the +1.3% consensus, though still indicating softness in the housing market. 
• U.S. Richmond Fed Manufacturing Index (Oct): Improved to -4 from -17, well above the -12 estimate. 

Today is all about the central banks. 

• 14:00 GMT – Bank of Canada (BoC) Rate Decision (Exp: 25bps cut to 2.25%): driven by dovish rhetoric and trade tensions. 
• 18:00 GMT – Federal Reserve (FOMC) Rate Decision (Exp: 25bps cut to 3.75-4.00%): A 25 bps cut is fully expected. The focus will be entirely on the statement’s language and Chair Powell’s tone regarding future policy moves. 
• 18:30 GMT – Fed Chair Powell’s Press Conference. 
• After Market Close: Mega-Cap Tech Earnings from Meta, Microsoft, and Alphabet.
• European Session: Spanish Flash Q3 GDP (low impact). 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities is the sharp reversal in Gold. After a historic run, the precious metal has pulled back sharply, with futures settling down 0.9% at $3,983.10 and breaking below the $4,000 level. While long-term bulls at J.P. Morgan see prices above $5,000, near-term headwinds from easing trade tensions have prompted others like Citi to lower their targets. Oil also extended its losing streak, with WTI Crude falling 1.89% to $60.15 a barrel as the market weighs potential OPEC+ actions against the uncertain impact of Russian sanctions. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.16	-0.0189	60.15
Brent Crude	-1.22	-0.0186	64.4
Gold	-36.6	-0.0091	3983.1
EUR/USD	-0.0017	-0.0015	1.166
USD/JPY	0.77	0.0051	152.12
10-Year Note Yield	-0.014	-0.0035	0.03983

The forex market saw significant divergence, with domestic policy expectations driving sharp moves in the Aussie and Pound while other pairs consolidated ahead of the Fed. 

• AUD/USD: The star of the overnight session, the Aussie dollar jumped towards 0.6600. The much hotter-than-expected Q3 CPI data has forced a dramatic repricing of RBA policy. A November rate cut is now off the table, providing a strong fundamental tailwind for the currency. 
• GBP/USD: The pair continued its slide, hitting its lowest level since August near 1.3220. The decline was accelerated by a new forecast from Goldman Sachs calling for a 25bp Bank of England rate cut in November. This, combined with weak retail sales data and fiscal concerns, is weighing heavily on the Pound. 
• EUR/USD: The pair edged lower towards 1.1630, failing to clear key resistance at 1.1660. Buyers are hesitating ahead of the Fed decision, with the pair caught between broad USD stability and the potential for a dovish Fed pivot. The price is currently caught between its key hourly moving averages, with a large $1.1B options expiry at the 1.1650 level likely to act as a resistance cap today.
• USD/JPY: The pair remains in a tight range above 151.70. Traders seem non-committal, caught in a tug-of-war between fears of FX intervention by Japanese authorities and the looming policy decisions from both the Fed and the Bank of Japan. A large $856M options expiry at the 149.00 level sits far below the current price.

The U.S. 10-year Treasury yield was stable, hovering just below the 4% mark at 3.983% as the bond market waits for clear signals from the Federal Reserve. Bitcoin saw a sharp price drop, crashing below $113,000 to trade near $112,000. The move reflects significant pre-event caution as traders reduce risk exposure ahead of the Federal Reserve’s decision and its Fear and Greed Index signaling rising caution, a common pattern in high-volatility assets.

Looking Ahead 

Today is all about the Federal Reserve. While the 25-basis-point cut itself is unlikely to surprise anyone, Chair Powell’s press conference will be scrutinized for any hint of the Fed’s future intentions. A “dovish cut,” suggesting more easing is possible, could weaken the dollar and boost risk assets. A “hawkish cut,” framing this as a one-off risk management move, could have the opposite effect. Traders should also be prepared for significant volatility after the market closes when earnings from three of the market’s most influential tech companies are released.What to watch: 

• Fed Day Centrality: This is the main event. While a 25bps cut is fully priced in, the market will hang on every word from Chair Powell’s press conference. With no official data to work with, his assessment of the “labor-consumption conundrum” and any guidance on a December move will be critical. 
• Aussie Dollar’s New Narrative: The hot CPI print is a game-changer for the RBA. Traders will be watching to see if the AUD can build on its gains and break key resistance levels, or if the rally will fade. 
• The Mega-Cap Tech Earnings Gauntlet: The after-hours earnings from Meta, Microsoft, and Alphabet will be a massive driver for the Nasdaq and S&P 500. Their results and forward guidance on AI and cloud spending will be crucial. 
• Gold’s Correction vs. Fed: Gold’s pullback is significant. The reaction to the Fed’s decision and Powell’s tone will be a major test for the precious metal. A dovish message could see dip-buyers emerge, while a more cautious stance could accelerate the correction.