Global financial markets are monitoring the situation closely as the U.S. Federal Reserve prepares to announce its latest policy decision. Although a 25 basis point rate cut is widely anticipated, investors will be closely monitoring new economic projections and a “dot plot” that could indicate the future path of monetary policy. Recent U.S. data has shown conflicting trends, with a decline in housing starts contrasting with stronger-than-expected retail sales. This dynamic is creating rotation risk between cyclical and defensive sectors. Microsoft’s recent announcement of a substantial $30 billion investment in UK AI infrastructure is indicative of the robust demand for AI and cloud services.

Meanwhile, the semiconductor industry is under pressure after reports emerged that China’s Cyberspace Administration of China (CAC) has instructed major tech firms to halt purchases of Nvidia’s AI chips. This strategic move, which has occurred in the context of escalating trade tensions and a government-backed initiative to advance domestic chip development in China, has exerted pressure on Nvidia’s share value and is being closely monitored for its potential ripple effect on other AI-related stocks in the U.S. and Japan.

In Europe, markets are stable in anticipation of the Fed’s decision. Recent data indicates that final August Eurozone inflation remained at 2.0%, alleviating some pressure on the European Central Bank, which is anticipated to maintain its current interest rates. However, a strengthening Euro is becoming a headwind for the region’s exporters. In Japan, equities have experienced a decline from their recent record highs as investors await further guidance from the Federal Reserve. The country’s trade data for August indicates a substantial decrease in exports to the U.S., indicating the impact of ongoing tariff disputes. The upcoming meeting of the Japanese central bank on September 18-19 will be a key focus for markets.