The Fed's quarter-point cut was widely expected so there was much more interest in the accompanying statements from officials. In the event, Fed Chairman Jerome Powell disappointed investors, particularly on Wall Street where the S&P 500 ended up having its worst day in two months, by saying the central bank had no plans for a long cycle of lowering rates.
"It was always going to be a tough job for the Fed to be as dovish as stock markets hoped," said Chris Beauchamp, Chief Market Analyst at IG. "Powell struggled to communicate a coherent vision of the Fed's outlook, as he sought to play down expectations that yesterday's cut was merely the first act in a sustained cutting cycle."
That heaped pressure on U.S. stocks and the selling pressure carried through into Asia overnight. However, by Thursday, the mood was calmer and European stocks and Wall Street futures were holding their own.
In Europe, Germany's DAX was up 0.2% at 12,213 while the CAC 40 in France rose 0.4% to 5,542. The FTSE 100 index of leading British shares lagged its counterparts, trading 0.2% lower at 7,569. The Bank of England's decision Thursday to keep its main interest rate on hold at 0.75% had little market impact given that it was widely anticipated. More clarity on the U.K.'s interest rate path will emerge over coming weeks in the run-up to the country's scheduled departure from the European Union on Oct. 31.
New Prime Minister Boris Johnson has said he will meet that deadline come what may, raising fears in the currency markets in particular that Britain was heading for a no-deal Brexit, which most economists think would lead to a deep recession. The pound has fallen this week to 28-month lows around $1.21.
Wall Street was poised for a flat opening at the bell with Dow futures and the broader S&P 500 futures unchanged. On Wednesday, the Dow fell by 1.2% while the S&P shed 1.1%. Earlier in Asia, the Shanghai Composite Exchange lost 0.8% to 2,908.77 and Hong Kong's Hang Seng shed 0.8% to 27,565.70. Tokyo's Nikkei 225 edged up 0.1% to 21,540.99. Sydney's S&P-ASX 200 lost 0.4% to 6,788.90 and India's Sensex declined 1.4% to 36,956.98.
ENERGY: Benchmark U.S. crude fell $1.13 to $57.45 in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, lost 97 cents to $64.08 per barrel in London.
CURRENCY: The euro was 0.4% lower at $1.1036 while the dollar was steady at 108.76 yen.