ASX climbs as Fed holds rates amid inflation concerns

The S&P/ASX 200 gained 32.2 points, or 0.4%, to 8,879.5 in early trade, supported by a positive opening on Wall Street after the Federal Reserve left interest rates unchanged. The Australian dollar traded at US$0.7049.

U.S. equities closed higher, with the S&P 500 up 0.3%, the Dow Jones Industrial Average gaining 0.2% and the Nasdaq Composite rising 0.3%. In the bond market, the two-year Treasury yield initially rose after the Fed announcement but later fell as expectations for further hikes receded.

In a 10-2 vote, the Federal Open Market Committee said it would keep its benchmark rate in the 3.75%-4.00% range, noting that inflation “remains elevated” and that more data will guide future policy.

“The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 per cent goal,” the statement read.

At a news conference, Fed chair Kevin Warsh said the committee had “started to see some changes in financial and credit conditions. They have tightened for some businesses and households.”

The Fed’s decision follows a rate increase last month, the first in three years, which ran counter to President Donald Trump’s calls for cuts. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, favoring a quarter-point hike.

Corporate earnings also lifted Australian shares. GE HealthCare Technologies rose 6.6% after beating summer profit and revenue expectations and raising its full-year forecasts. Etsy climbed 5.5% as its quarterly profit exceeded forecasts, with CEO Kruti Patel Goyal noting growth in active buyers and sellers.

In the technology sector, AI-related stocks held steady after recent volatility, while Alphabet’s post-market report of higher cash burn pushed its shares down more than 6% in extended trading. Micron Technology led U.S. gains, up 5.9%.

Outside tech, Wendy’s shares jumped 15.2% to US$7.07 after Trian Fund Management offered to acquire the chain for US$7.35 per share. Boston Scientific fell 5.9% despite a milder profit decline, and Robinhood Markets slipped 3.3% after reporting weaker quarterly results.