US stock futures opened slightly higher, with the and Dow up 0.1% and Nasdaq futures rising 0.3%. Investors are digesting a wave of earnings from major firms including Boeing (NYSE:), Visa (NYSE:), Procter & Gamble (NYSE:), and Spotify (NYSE:). So far, corporate results have been supportive, helping cushion markets from deeper macro uncertainty.
But Wednesday’s decision remains the main event. While a rate hold is widely expected, markets are searching for clues on the timing and scale of future cuts. Bond yields have edged down, with the at 4.40% and traders still pricing in nearly two cuts this year. Political pressure from the Trump administration for earlier easing has added more weight to Powell’s upcoming message.
Europe Balances Corporate Gains and Tariff Risks
European equities saw modest strength. The rose 0.4%, supported by standout performances from Philips, up 12% after raising guidance, and EssilorLuxottica, which jumped over 5%. However, auto giant Stellantis (NYSE:) declined nearly 3% after warning of €1.5 billion in tariff-related costs this year.
The euro fell as investors grew concerned about the economic drag from higher tariffs. The recently signed U.S.-EU trade agreement imposes a 15% baseline tariff, a heavier burden than the 10% rate applied to U.K. goods. As a result, sterling climbed against the euro despite losing ground to the dollar.
Asia Struggles to Find Direction
Asian markets posted mixed results. Japan’s slipped 0.8% and Hong Kong’s dropped 0.5%, while China’s rose 0.3% and South Korea’s Kospi logged its fifth consecutive gain.
Despite some regional resilience, Asia remains vulnerable to global trends, especially the rising U.S. dollar. The DXY hit a one-month high, reflecting optimism around U.S. earnings and macro stability. MUFG Bank noted a shift in investor focus from trade uncertainty to U.S. economic strength.
A Market Divided on What Comes Next
Markets are clearly split. Stocks are holding steady, reflecting confidence in corporate performance and hopes for a soft landing. Bond markets, on the other hand, suggest caution and slower growth ahead. The dollar’s rally points to global capital seeking refuge in U.S. stability.
All eyes now turn to the Federal Reserve. If Chair Powell signals that rate cuts are coming sooner rather than later, markets may rally further. If he stays cautious and stresses data dependency, equities may lose momentum.
Either way, tomorrow’s Fed decision could set the tone for the rest of the summer.