The FTSE 100 (^FTSE) and European stocks were lacklustre on Wednesday as the European Union and India reached a trade deal that European Commission president Ursula von der Leyen called the “mother of all deals.”

The landmark agreement will allow free trade of goods between the bloc of 27 European states and the world’s most populous country, which together make up nearly 25% of global gross domestic product and a market of two billion people.

The deal will see a number of huge tariff cuts across a range of goods and services, and a joint security partnership.

“We did it, we delivered the mother of all deals,” European Commission president Ursula von der Leyen said at a media briefing in Delhi. Meanwhile, India’s prime minister Narendra Modi called the pact “historic”.

It comes after almost two decades of on-and-off talks, with both sides aiming to deepen ties amid tensions with the US.

The euro has hit $1.20 against the greenback on Wednesday, setting a new milestone as the dollar continues to sour. The dollar has been on the backfoot against a number of major currencies, sinking to a fresh four-year low today.

Elsewhere, traders will focus on the US Federal Reserve interest rate decision later today. Markets are expecting no change at the meeting, with policymakers widely expected to leave the funds rate at its range of 3.75% to 3.5%. This could inject further volatility into dollar trading.

The next rate reduction is not expected until after chairman Jerome Powell departs in May.

London’s benchmark index (^FTSE) eked out a 0.1% gain in early morning trade.

Germany’s DAX (^GDAXI) was also treading water and the CAC (^FCHI) in Paris headed 0.7% into the red.

The pan-European STOXX 600 (^STOXX) was flat.

Wall Street is set for a positive start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green.

The pound was 0.3% down against the US dollar (GBPUSD=X) at 1.3804.

FTSE Index – Delayed Quote • USD

10,194.61 -13.19 (-0.13%)

As of 9:01:12 GMT. Market open.

Follow along for live updates throughout the day:

LIVE 3 updates

Fed set to announce next interest rate decision

The US Federal Reserve is set to keep US interest rates on hold today despite mounting pressure from president Donald Trump.

Policymakers are widely expected to leave the funds rate at its range of 3.75% to 3.5%, with the next reduction not expected until after Jerome Powell departs as chairman in May.

The Fed chairman has been placed under a criminal investigation over renovations to the central bank’s buildings and has been repeatedly attacked by Trump for being too slow to lower rates.

The Fed has reduced borrowing costs at each of its last three meetings amid concerns about the cooling jobs market.

Today’s decision will be announced at 7pm UK time but the focus will be on the press conference shortly after, where several non-economic issues are likely to come up, including the recent DoJ subpoena, the Lisa Cook case at the Supreme Court, the next chair, and whether Powell will remain as a governor after his term as chair concludes in May.

US economists at Deutsche Bank expect Powell to reiterate the points made in his statement on the subpoena earlier this month, and not comment on the next chair.

But in terms of policy, they expect the Fed to present a more upbeat view about the economy, and think the statement will signal that they’re well-positioned to respond to risks on either side of their dual mandate.

Asia and US overnight

Stocks in Asia were higher overnight, with the Nikkei (^N225) up a marginal 0.05% on the day in Japan, while the Hang Seng (^HSI) rose 2.6% in Hong Kong. The Shanghai Composite (000001.SS) was 0.3% up by the end of the session.

In South Korea, the Kospi (^KS11) added 1.7% on the day, reaching a fresh record. It was lifted by gains for technology shares like computer chip maker SK Hynix (000660.KS), which climbed 5.1%.

The dollar rebounded slightly against the Japanese yen but has still weakened sharply since last week, putting pressure on shares of major exporters.

US greenback was trading at 152.75 yen, up from 152.19 yen, however it is almost 4% lower than its level last week, when it surged to near 160 yen, prompting both Japanese and US officials to warn they will intervene to stanch the yen’s decline.

An index measuring the US dollar’s strength against several of its competitors dropped to its lowest point since 2022. It posted its biggest 4-day decline since the Liberation Day turmoil last April.

Across the pond, the S&P 500 (^GSPC) hit a new record, up 0.4% to 6,979 points, as investors await the latest decision on interest rates by the Federal Reserve. The tech-heavy Nasdaq (^IXIC) was 0.9% higher. The Dow Jones (^DJI) also gained 0.8%.

SNP – Delayed Quote • USD

6,978.60 +28.37 (+0.41%)

At close: 27 January at 16:47:50 GMT-5

Coming up…

Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what’s moving markets and happening across the global economy.

Looking at the day ahead, and the main highlight will be the Federal Reserve’s policy decision, along with chair Powell’s press conference. Otherwise, the Bank of Canada will announce their latest decision, and we’ll hear from the ECB’s Elderson and Schnabel. Finally, today’s US earnings releases include Meta, Microsoft, Tesla, IBM, AT&T and Starbucks.

Here’s a snapshot of what’s on the agenda:

7am: Trading updates: Fresnillo, Pets at Home, Marston’s, PayPoint, Hargreaves Services, Paragon Banking

2.45pm: Bank of Canada interest rate decision

3.30pm: US Crude Oil Inventories

7pm: US Federal Reserve interest rate decision

7.30pm: Fed press conference

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