Fed Watch Keeps Stocks Muted; Turkish Assets Sink: Markets Wrap

(Bloomberg) — European stocks and US equity futures posted small moves in cautious trade before the Federal Reserve’s policy decision later Wednesday. Turkey’s lira plunged more than 10% after authorities detained President Recep Tayyip Erdogan’s most prominent rival.

The Stoxx 600 edged lower in Europe, with most sectors in the red, while contracts for the S&P 500 and the Nasdaq 100 kept to narrow ranges. A regional Asian share gauge erased an earlier advance. The dollar strengthened and gold rose to a new record. 

Turkey’s lira weakened to a record low past 40 per dollar, a selloff in the country’s stocks triggered a trading halt and government bond yields surged to the highest level this year. The dramatic declines followed the detention of Ekrem Imamoglu, who’s the mayor of Istanbul, in a move that could bar him from challenging Erdogan in the next presidential election. 

The Fed is expected to hold interest rates steady and its quarterly dot plot should give investors more insight into the outlook for the economy. Traders will also be focused on Fed Chair Jerome Powell’s press conference and his juggling act between communicating the central bank’s current view of the economy and weighing the potential impact of President Donald Trump’s trade policy.

“Amidst a deteriorating economic backdrop caused by tariffs and general trade uncertainty, the markets are looking for the proverbial ‘Powell put,’ hopefully expressed in dovish guidance and a lowered dot plot in the updated Summary of Economic Projections, said Kyle Rodda, a senior market analyst at Capital.com.

Options traders are pricing in a 1.2% move in the S&P 500 in either direction on Wednesday — up from an average of 0.8% for Fed days over the past year, according to data from Stuart Kaiser, Citigroup Inc.’s head of US equity trading strategy.

“Historically, Fed days when rates have been left unchanged have tended to see solid gains,” Bespoke Investment Group strategists said. 

The yen steadied after hitting an intraday low against the dollar as the Bank of Japan kept rates steady and signaled concern about the impact of trade tensions on the global economy. Traders also tracked Kazuo Ueda’s press conference Wednesday afternoon, where the Governor said that the trend in consumer prices continues to rise, but it’s still below the central bank’s 2% target.

“The BOJ seems to be now factoring in external uncertainties, including tariff risks, into its decision-making. This could reduce the hawkish tilt,” said Charu Chanana, chief investment strategist at Saxo Markets. “In the Trump era, central banks play a less dominant role, so the yen’s impact may not be as pronounced as it was last year.” 

In commodities, oil slipped as broader market weakness and concerns about a global glut of crude overshadowed escalating tensions in the Middle East. Meanwhile, gold extended a record high to around $3,045 an ounce.

Key events this week:

• Federal Reserve rate decision, Wednesday
• China loan prime rates, Thursday
• Bank of England rate decision, Thursday
• US Philadelphia Fed factory index, jobless claims, existing home sales, Thursday
• Eurozone consumer confidence, Friday
• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.3% as of 8:12 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.4% to $1.0899
• The Japanese yen was little changed at 149.39 per dollar
• The offshore yuan fell 0.2% to 7.2397 per dollar
• The British pound fell 0.3% to $1.2968

Cryptocurrencies

• Bitcoin rose 1.6% to $83,361.29
• Ether rose 1.5% to $1,935.2

Bonds

• The yield on 10-year Treasuries was little changed at 4.28%
• Germany’s 10-year yield declined three basis points to 2.78%
• Britain’s 10-year yield declined two basis points to 4.63%

Commodities

• Brent crude fell 0.4% to $70.25 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck and Richard Henderson.

©2025 Bloomberg L.P.