ASX set to edge up, Wall Street slides ahead of Fed’s rate decision

After the Fed announces its decision, Chair Jerome Powell will also speak with reporters, where he could give hints about whether the central bank is envisioning more cuts to rates this year. In December, the Fed helped send U.S. stocks to one of their worst days of 2024 after indicating it envisions cutting the fed funds rate just twice in 2025, down from an earlier projection of four times.

Lower rates can goose the economy by making borrowing cheaper, which would raise corporate profits. They can also boost prices for investments, but the downside is they could provide more fuel for inflation. And worries have been climbing that inflation may be difficult to fully subdue to the Fed’s 2 per cent target, particularly with uncertainty about tariffs and other policies potentially coming from President Donald Trump.

Treasury yields held relatively steady in the bond market ahead of the Fed’s decision. The yield on the 10-year Treasury rose to 4.55 per cent from 4.53 per cent late Tuesday.

On Wall Street, Starbucks rose 6.8 per cent after delivering a better profit for the latest quarter than analysts expected. CEO Brian Niccol said the chain is planning to cut its food and beverage offerings by 30 per cent over the course of this year to simplify operations and speed service, part of its efforts to turn the company around.

T-Mobile US rallied 7.8 per cent after topping Wall Street’s expectations for both profit and revenue in the last three months of 2024. It also said it expects to add between a net 5.5 million and 6 million in postpaid customers this year.

Brinker International jumped 14.3 per cent after the company behind Chili’s restaurants delivered better results than expected. CEO Kevin Hochman said Chili’s attracted new customers and that its return customers were coming more frequently.

Railroad operator Norfolk Southern rose 3.3 per cent after it beat Wall Street’s profit forecasts. There is also growing optimism that a Republican-controlled Congress could ease restrictions on the industry.

Frontier Group Holdings climbed 5.9 per cent after announcing it would try for a second time to merge with Spirit Airlines, which sought bankruptcy protection late last year. Frontier said the proposed deal would include newly issued Frontier debt and common stock.

On the losing end of Wall Street was Danaher, which fell 8.7 per cent after the life sciences, biotechnology and diagnostics company reported results for the latest quarter that just missed analysts’ expectations.

In stock markets abroad, indexes were mixed in Europe. ASML’s stock jumped 5.6 per cent in Amsterdam after announcing strong revenue on demand for its advanced chipmaking tools.

In Asia, where many markets were closed for holidays, Japan’s Nikkei 225 rose 1 per cent.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.