Key Takeaways
- The Federal Reserve held rates at 4.25%–4.50%, citing persistent economic uncertainty, triggering waves in global markets, and weakening the dollar.
- The U.S. and South Korea struck a major trade deal, slashing tariffs to 15% in exchange for $350B in Korean investment across strategic U.S. sectors.
- Gold surged to $3,297/oz, recovering from session lows on renewed safe-haven demand as the Fed’s cautious tone pressured the dollar.
- Bitcoin rebounded to $118,514 after dipping to $115,608, lifted by broad risk recalibration following the Fed’s pause.
On July 31, markets slipped under pressure from several major developments, ranging from central bank decisions to high-stakes trade diplomacy, before stabilizing later in the session.
One of the key drivers was the Federal Reserve’s decision to hold interest rates steady at 4.25% to 4.50%, citing “persistent uncertainty” about the U.S. economic outlook. While investors and market watchers largely anticipated it, the tone of the statement made investors cautiously concerned. It was not dovish enough to signal imminent easing but pointed to a central bank that intends to stay on pause.
With inflation still running above the 2% target and no significant signs of economic weakness, markets see a small chance for a rate cut in the near term, while policymakers appear unwilling to raise rates again anytime soon.
That policy ambiguity sparked sharp but temporary swings across asset classes as traders reassessed the broader monetary backdrop.
President Donald Trump added to the day’s volatility with the announcement of a trade agreement with South Korea. The deal lowers U.S. tariffs on Korean imports to 15% from a proposed 25% and was finalized just before a self-imposed August 1 deadline.
The agreement also includes a $350 billion South Korean investment package focused on sectors such as semiconductors, shipbuilding, secondary batteries, biotechnology, and energy.
“We’ve overcome a major hurdle,” South Korean President Lee Jae Myund said Thursday. “It has removed uncertainties on Korea’s export front.”
“Despite the tight deadline and challenging conditions, the government dealt with the negotiations, considering our national interest the top priority,” Lee said. “By adjusting U.S. tariffs on par with or below those of our major export competitors, we have created an environment in which we can compete on equal or superior terms with them.”
South Korean officials confirmed that U.S. tariffs on cars would be reduced, and key industries, like chipmaking and biopharma, would receive most-favored-nation treatment. Meanwhile, Trump echoed the sentiment on Truth Social, calling the agreement “complete.”
In Asia, the Bank of Japan kept its policy rate steady at 0.5%, but surprised markets by raising its inflation forecast and expressing cautious optimism on economic growth. The move marked a shift away from the Bank’s traditionally dovish stance. The yen climbed 0.5% to 148.78 per dollar, reversing earlier weakness, while Japanese bonds sold off sharply. Yields on the two- and five-year JGBs touched session highs as traders priced in the likelihood of further tightening.
The S&P 500 dropped to 6,337 before stabilizing at 6,362.89, and the Nasdaq slipped to 21,040 before rebounding to 21,129.67. Gold fell to $3,270.01 during the session before rebounding to $3,297.09. Bitcoin sank to $115,608 before recovering to $118,514, lifted by a weakning dollar and stabilizing sentiment.
Global Indices
- S&P 500: 6,362.89 ▼ 0.13%
- Dow Jones: 44,461.28 ▼ 0.38%
- Nasdaq Composite: 21,129.67 ▲ 0.15%
- Nikkei 225 : 41,085 ▲ 0.08%
- Euronext 100: 1,601.03 ▲ 0.22%
- FTSE 100: 7,898 ▼ 0.02%
Cryptocurrencies
- Bitcoin (BTC/USD): $118,314 ▲ 0.48%
- Ethereum (ETH/USDT): $3,859.30 ▲ 1.30%
- Binance Coin (BNB/USDT): $803.61 ▲ 1.27%
- Solana (SOL/USDT): $180.85 ▲ 1.73%
Commodities
- Gold: $3,297.09 ▲ $22.08 (+0.67%)
- Silver: $37.24 ▲ 0.32%
- WTI Crude: $68.64 ▼ 0.50%
- Brent Crude: $71.34 ▼ 0.48%
Major Stocks
- NVIDIA (NVDA): $179.27 ▲ 2.14%
- Tesla (TSLA): $319.04 ▼ 0.67%
- Microsoft (MSFT): $513.24 ▲ 0.13%
- Meta (META): $695.21 ▼ 0.68%
- Apple (AAPL): $209.05 ▼ 1.05%
- Amazon (AMZN): $230.19 ▼ 0.35%
Forex
- U.S. Dollar Index (DXY): 99.27 ▼ 0.17%
- EUR/USD: 1.143 ▲ 0.25%
- GBP/USD: 1.3266 ▲ 0.33%
- USD/JPY: 148.93 ▼ 0.36%
Read More: Bitcoin Slips below $117K as Fed Kept Rates Unchanged
