Markets Retreat as Fed Uncertainty Grows

Global markets turned lower on Friday as investor sentiment soured following renewed uncertainty over the Federal Reserve’s next policy move and profit-taking in overheated technology shares. Meanwhile, President Donald Trump announced a major policy shift aimed at cutting tariffs on essential food imports and securing new trade deals across Latin America — a strategy designed to ease consumer prices and restore affordability amid persistent inflation pressures.

Global Market Overview

Asian equities reversed four days of gains, dragged down by renewed concerns that the Federal Reserve may delay additional rate cuts. The MSCI Asia Pacific Index fell 1.4%, with semiconductor and AI-related stocks leading the declines. South Korea’s Kospi tumbled 3.5% while Hong Kong’s Hang Seng shed 1.4%. Japanese markets were also lower, with the Topix down 0.8%.

Futures for both the S&P 500 and Nasdaq 100 fluctuated after Thursday’s drop in US benchmarks, as traders reassessed the likelihood of a December rate cut. Current market pricing shows an even split between expectations for another reduction and a pause. Yields on 10-year US Treasuries held steady near 4.11%, reflecting a cautious tone ahead of upcoming economic data releases.

European equity futures also pointed to a softer open, following Wall Street’s overnight weakness. The pound weakened sharply against its peers after reports that the UK government might abandon plans to raise income taxes, while the euro edged slightly higher.

Monetary Policy and Economic Outlook

Recent remarks from Fed officials have dampened expectations for another rate cut this year. St. Louis Fed President Alberto Musalem and Cleveland Fed President Beth Hammack both signaled caution, suggesting that policy should remain “somewhat restrictive” until inflation is firmly on track toward the 2% goal. Minneapolis Fed President Neel Kashkari, meanwhile, said he was undecided about supporting another cut.

The reopening of the US government has shifted investor focus to incoming macro data, but limitations remain. The October jobs report will omit the unemployment rate due to incomplete household surveys during the shutdown. This data gap could complicate the Fed’s decision-making, reinforcing the central bank’s patient stance.

Gold and silver extended their rallies, rising 0.4% and over 10% respectively for the week, buoyed by lingering expectations of further policy easing. Gold hovered near $4,200 an ounce, marking one of its strongest weekly gains of the year.

Corporate Highlights

Corporate developments contributed to the risk-off mood. Verizon is reportedly planning workforce reductions of up to 20% in a restructuring move, while Kioxia Holdings shares plunged 23% after missing earnings expectations. In healthcare, Merck & Co. is nearing a deal to acquire Cidara Therapeutics to expand its influenza treatment portfolio.

Bitcoin dropped below $98,000, extending its monthly decline beyond 20%, while Ethereum held slightly firmer.

Trade and Policy Developments

President Donald Trump unveiled plans for sweeping tariff reductions targeting essential food imports, alongside new trade agreements with Argentina, Guatemala, El Salvador, and Ecuador. The initiative aims to reduce grocery prices by easing import costs on key items such as beef, bananas, and coffee.

The deal with Argentina is the most significant of the new arrangements, providing mutual market access for a range of goods — from US medical equipment and technology to Argentine beef and citrus products. The move also strengthens ties with President Javier Milei, who has been seeking to liberalize Argentina’s protectionist economy.

Trump’s broader strategy includes extending exemptions on tariffs for food products that are not produced domestically. The White House expects these measures to lower prices for US consumers and stimulate bilateral trade with regional partners.

While the initiative could help the administration counter criticism over high living costs, it also partially reverses tariffs Trump himself imposed earlier in his term. The administration maintains that these recalibrated trade relationships will support American businesses while addressing affordability concerns.

Commodities and Energy

Crude oil prices rebounded sharply, with Brent climbing as much as 3% amid heightened geopolitical risks to Russian energy exports following new US sanctions and ongoing Ukrainian strikes. West Texas Intermediate traded near $59.65 per barrel.

Precious metals continued to benefit from safe-haven demand, while the rally in gold and silver reflects both inflation hedging and doubts about near-term Fed easing.

Markets entered a consolidation phase after a strong rebound earlier in the week. Investors are shifting focus from policy speculation to hard data, with upcoming US reports likely to set the tone for the remainder of the year. Meanwhile, Trump’s tariff cuts and trade diplomacy may temporarily boost sentiment on affordability, but questions remain over their long-term impact on domestic producers and inflation dynamics.

Volatility is likely to stay elevated as the year-end approaches, particularly with technology valuations stretched, commodity prices rising, and monetary policy signals mixed. Traders will be watching next week’s key corporate earnings — notably from Nvidia — as a critical gauge for broader market direction.