US Stocks Mixed Ahead Of FOMC, Alibaba Shares Jump on AI Hype

The euro surged past 1.1870 against the dollar on Tuesday, touching its highest level since 2021, as markets ramped up bets that the Federal Reserve will restart its easing cycle this week.

August Retail Sales surprised to the upside, rising 0.6% month-on-month after July’s 0.5% gain and handily beating forecasts of 0.2%. Industrial Production also grew in August, supported by a modest rebound in manufacturing and a decline in utilities output

Even so, investors largely ignored the figures, keeping their focus on the Fed’s policy path.

This week’s Fed meeting marks the debut of Dr. Stephen Miran, nominated by President Donald Trump, while Governor Lisa Cook is also participating after a US court allowed her attendance. Traders will be closely watching Powell’s press conference and the updated “dot plot” to gauge how aggressively the Fed intends to lower rates.

In Europe, Germany’s ZEW Economic Sentiment Index climbed to 37.3 in September from 34.7 in August, well above forecasts of 26.3. Meanwhile, Eurozone Industrial Production rose 0.3% month-on-month, narrowly missing estimates of 0.4%, reinforcing the view of steady but modest growth in the region’s manufacturing sector.

Attention now turns to Eurozone inflation figures later this week, which could provide fresh direction for EUR/USD. Traders remain focused on Powell’s remarks and the Fed’s updated projections as key catalysts for the pair’s next move.

Gold prices pushed higher on Tuesday as the dollar weakened and markets anticipated fresh easing from the Federal Reserve. The move extends a cautious uptrend, though improving global risk sentiment may cap the safe-haven metal’s upside.

The Fed is widely expected to lower its benchmark rate by 25 basis points at the September meeting, marking the first cut of 2025 and bringing the federal funds rate to a 4.00–4.25% range. Traders are also positioning for additional cuts later this year, as recent US data pointed to labor market softness and muted inflation pressures. Lower rates tend to support gold by reducing the opportunity cost of holding the non-yielding asset.

Beyond the Fed, traders are closely monitoring the latest round of US-China negotiations. Talks are being led by US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, alongside Chinese Vice Premier He Lifeng. Signs of easing trade frictions or improving global sentiment could weigh on gold demand as investors shift into riskier assets.

The Fed’s policy decision and Chair Jerome Powell’s press conference later on Wednesday will be the key catalysts for gold’s next move. Market participants will also keep an eye on developments from Washington-Beijing talks as a secondary driver of risk appetite.

Crude oil prices advanced on Tuesday as escalating Ukrainian drone attacks on Russian energy infrastructure raised concerns over supply disruptions, while traders awaited the Federal Reserve’s rate decision later this week.

Russia’s state pipeline operator Transneft has warned producers that output could be curtailed following repeated Ukrainian strikes on export ports and refineries. Last week, operations at the key Primorsk terminal were disrupted as negotiations between Kyiv and Moscow remained stalled.

Goldman Sachs estimated that Ukrainian attacks have sidelined around 300,000 barrels per day of Russian refining capacity between August and September. US diesel futures jumped 2.5%, outpacing both crude and gasoline gains, as analysts warned that further damage to Russian refineries could tighten global diesel markets and increase demand for US exports.

Investor attention is also fixed on the Fed’s September 16–17 policy meeting, where a rate cut is widely anticipated. Lower borrowing costs could stimulate economic activity and bolster fuel demand, though analysts remain cautious about the strength of the US economy.

Meanwhile, crude inventory data due Wednesday is expected to show a drawdown in US oil and gasoline stockpiles, while distillates likely rose, according to a Reuters survey.

Markets will closely watch official Energy Information Administration (EIA) figures later this week, alongside developments in Russia-Ukraine tensions and the Fed’s policy stance, for direction on oil prices.

US stocks ended lower on Tuesday after the US 500 briefly touched a fresh intraday record, with traders turning cautious ahead of the Federal Reserve’s widely expected policy decision on Wednesday.

Economic data showed US retail sales rose 0.6% in August, outpacing forecasts for a 0.2% increase and matching July’s upwardly revised gain. Strong demand from e-commerce retailers helped drive the advance, though analysts cautioned that a softening labor market could weigh on momentum heading into the fourth quarter.

The Fed began its two-day meeting on Tuesday and is expected to announce a 25 basis point rate cut, the first of 2025, lowering the federal funds rate to 4.0–4.25%. Markets are pricing in at least three cuts by year-end, with updated projections and Chair Jerome Powell’s press conference set to guide expectations.

Risk appetite was also supported by signs of progress in US-China trade talks taking place in Madrid. President Donald Trump said discussions had gone “very well” and confirmed that a deal was reached regarding TikTok’s US ownership. Treasury Secretary Scott Bessent added that a framework agreement was in place, with a call between Trump and Chinese President Xi Jinping scheduled for Friday to finalize details.

In corporate news, Ford said it would cut up to 1,000 jobs at its Cologne EV plant in Germany amid weak demand. Google announced plans to invest £5 billion ($6.8 billion) in the UK ahead of Trump’s state visit, which is expected to showcase new trade and business deals.

Oracle, meanwhile, rose after reports that it is part of a consortium backing TikTok’s continued US operations under the emerging trade deal framework.

Investors now await the Fed’s policy announcement and updated forecasts on Wednesday, with Powell’s comments expected to set the tone for equity markets heading into the final stretch of the quarter.