Stocks Slump After Fed. Bank of England Meeting Today.

The Fed’s decision to hold rates steady and signal only limited easing this year helped lift the US dollar and led to steep losses on Wall Street. Attention now turns to today’s Bank of England and ECB policy decisions, where markets are expecting no change in rates but will watch closely for any shift in guidance.

Equities

The FTSE 100 closed 0.9% lower on Wednesday, giving back earlier gains as oil prices turned sharply higher during the session. The FTSE 250 also finished lower, down 0.5%. In London, Unilever was one of the main drags on the blue-chip index, closing 3.4% lower on Wednesday.

A Bloomberg report said the consumer goods group is considering a separation of its food assets. That report put fresh focus on the company’s portfolio plans and added pressure to a defensive part of the market that was already weak.

By contrast, Diploma stood out on the upside. Its shares jumped 17.8% on Wednesday to a record high after the technical products and services distributor raised its guidance for the 2026 financial year. That was one of the sharpest single-stock moves in the UK market and followed a clear management signal that trading is running ahead of previous expectations.

Investors were also looking ahead to the Bank of England’s policy decision due on Thursday. Morningstar economist Grant Slade said he still expects one 25 basis point rate cut later this year and argued that concerns about a rate rise are overdone, even with energy prices moving higher. That view came as UK equities reacted to the same inflation concerns being felt across global markets.

In the US, the S&P 500 closed 1.36% lower on Wednesday at 6,624.70, its weakest close in nearly four months. The Nasdaq ended the session down 1.46%, while the Dow Jones Industrial Average fell 1.63%. Markets came under further pressure after the Federal Reserve left interest rates unchanged, while updated projections pointed to just one quarter-point cut by the end of 2026.

Macy’s closed 4.7% higher on Wednesday after beating quarterly profit expectations and saying the second-half impact from tariffs should be comparatively smaller than feared. Lululemon rose 3.8% after quarterly results, while founder Chip Wilson said lead director David Mussafer’s planned departure from the board was “a step in the right direction” and repeated his call for a substantial board refresh.

Apollo Global Management added 2.1%, recovering some of last week’s losses tied to private credit concerns. AMD closed 1.6% higher after agreeing with Samsung Electronics to expand their strategic partnership on memory chip supplies for AI infrastructure. Afterhours, Micron fell 4.3% despite forecasting quarterly sales above Wall Street expectations, as investors reacted to higher planned capital spending for fiscal 2026.

Forex & Commodities

The US dollar strengthened on Wednesday after the Federal Reserve left interest rates unchanged and kept its guidance pointing to one rate cut this year. By late in New York, the euro was lower at $1.148, sterling had fallen to $1.329, the dollar was firmer against the Swiss franc at 0.7920, and the yen had weakened to ¥159.7 per dollar. The dollar index also moved higher to 100.0, putting it on course to break a two-session run of losses.

The Fed’s updated projections showed higher inflation, weaker growth and softer employment than in December. In his remarks after the decision, Chair Jerome Powell said the central bank would look through higher oil prices if there is further progress on core inflation during the year.

Earlier on Wednesday, US labour market and inflation data added to the picture. Reuters reported that producer price data came in above expectations, reinforcing the view that the Fed is unlikely to rush into cutting rates.

Other major central banks are also due to set policy this week, including the Bank of England today and the European Central Bank today and the Bank of Japan. Markets are widely expecting all three to leave rates unchanged, with attention on any guidance about the path for borrowing costs.

In metals, spot gold fell early on Thursday to $4,764 per ounce, its lowest level since 6 February. The stronger dollar and the Fed’s firmer tone reduced expectations for near-term rate cuts, while higher oil prices also weighed on sentiment towards bullion.

Oil moved sharply higher early on Thursday morning after attacks on energy infrastructure across the Middle East. Brent crude rose to $113.5 a barrel after earlier touching $115.1, while US WTI traded at $96.89 after earlier reaching $100.0. Reuters reported damage at Qatar’s Ras Laffan hub, attacks on Saudi facilities and a drone strike on Kuwait’s Mina al-Ahmadi refinery.