Daily Brief: Fed Holds Rates, Alphabet Slides on AI Spending

The US Federal Reserve held interest rates steady in a split vote, while heavy spending on artificial intelligence (AI) sent Alphabet shares sharply lower after hours and Microsoft higher. Spain is mourning at least 68 people killed in a high-speed train crash, Britain's chancellor delivered his first budget, and Washington sent mixed signals on talks with Iran.

Fed holds rates as two officials back a hike

The Federal Reserve held its benchmark rate at 3.75% to 4% on Wednesday in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favour of a quarter-point increase. Chair Kevin Warsh told reporters that bringing inflation back to the 2% target remained the priority and that politics had played no role ahead of next week's midterm elections. He said the Fed would vote on rates at only seven of its eight meetings next year. The S&P 500 rose 0.3% to 7,743.98 and the Dow Jones Industrial Average gained 0.2% to 52,475.10.

Alphabet slides on AI spending as Microsoft gains

Alphabet shares fell as much as 10% in extended trading on Wednesday after third-quarter revenue of $127.6 billion came in slightly below forecasts and capital spending more than doubled to $51.4 billion. Google Cloud revenue reached $30.7 billion, and free cash flow was negative $9.1 billion, Fortune reported. Alphabet said 2027 capital spending would "increase significantly". Microsoft shares rose about 3% after hours after fiscal first-quarter revenue rose 19% to $92.3 billion, above forecasts. Its Azure cloud business grew 48%.

Spain mourns 68 killed in high-speed train crash

Spain began three days of national mourning on Thursday after a high-speed train crash in Toledo province killed at least 68 people on Wednesday. A Renfe train struck a stationary Iryo train from behind near Urda on the Madrid to Seville line, derailing two coaches. Transport Minister Óscar Puente said a control centre had given an "inexplicable" order for the Renfe train to proceed after a safety system failed, and that the drivers were not to blame. Prime Minister Pedro Sánchez promised an investigation. It is Spain's second deadly high-speed crash this year.

Vance contacts Iran as Trump plays down talks

Vice President JD Vance sent a letter to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, to explore reviving negotiations, The Wall Street Journal reported on Wednesday. The letter set out a possible framework for talks rather than a peace plan, the newspaper said. President Donald Trump said he had approved the outreach but that it concerned Iran's need for medical supplies, and denied ordering Vance to restart peace talks. Iranian Foreign Minister Abbas Araghchi said Tehran was in "close and ongoing contact" with mediators on its seven-day plan to reopen the Strait of Hormuz.

Netanyahu bloc leads Israeli count, majority elusive

Prime Minister Benjamin Netanyahu's bloc had 53 of the Knesset's 120 seats with about 90% of votes counted, according to Central Elections Committee figures on Wednesday night, eight short of a majority. The opposition bloc led by former military chief Gadi Eisenkot had 48 and Arab parties a record 19, Ynet and The Times of Israel reported. Counting of several hundred thousand double-envelope ballots, cast mainly by soldiers and diplomats, began early on Thursday and could shift seats. Official final results are expected on 4 November.

Healey's first budget cuts power bills, raises bank tax

British Chancellor John Healey delivered his first budget on Wednesday, removing value-added tax (VAT) from household electricity bills and raising the bank surcharge by three percentage points to help fund energy support. About 20 million households will receive a £100 energy payment. Healey said Britain would aim to spend 3% of gross domestic product (GDP) on defence by 2030, which Conservative leader Kemi Badenoch called "a plan to have a plan". The Office for Budget Responsibility forecast growth of 1.2% this year. Ten-year gilt yields fell 2 basis points to 5.323%.

Samsung record profit fails to lift shares

Samsung Electronics reported record third-quarter operating profit of 107.4 trillion won on Thursday, up 783% from a year earlier, driven by demand for AI memory chips. The company said it was the first technology company to exceed 100 trillion won in quarterly operating profit, on record revenue of 195.3 trillion won. Its shares fell 4.1% to 232,000 won as investors sought more detail on shareholder returns, pulling South Korea's Kospi index down 1.24% to 5,937.66, the Korea JoongAng Daily reported.

Ukraine sets November window for US-Russia talks

Ukrainian President Volodymyr Zelenskiy said on Wednesday he hoped negotiators from Ukraine, Russia and the United States would meet in Abu Dhabi between 6 and 10 November, Reuters reported. Speaking in The Hague, he said Europe must be involved. Kremlin aide Yuri Ushakov said European countries would not take part, which Finnish President Alexander Stubb disputed. Ushakov also said talks with Washington on lifting sanctions on the Russian Direct Investment Fund had been "going on for some time". Britain announced more than £10 billion in additional support for Ukraine.

Judge rejects bid to set aside California ballots

A US federal judge on Wednesday rejected a Justice Department request to stop California counting mail ballots from about 20,000 people the department had labelled likely non-citizens, six days before the 3 November midterm elections. "Never before in American history has the federal government, on the eve of an election, sought to coerce a state," District Judge David Carter wrote. The department appealed to the Ninth Circuit Court of Appeals, Reuters reported. California says the department relied on "suspect data" and that complying would risk disenfranchising eligible voters.

Oil eases and tech futures fall in Asia

Oil prices fell in Asian trade on Thursday after reports of US outreach to Iran, reversing part of Wednesday's gains. Brent crude was at about $114 a barrel after settling 1.3% higher at $115.32 on Wednesday, while US West Texas Intermediate (WTI) traded near $101.45 after closing 2.9% higher at $102.78, according to The National and OilPrice.com. US Nasdaq futures fell 1.4% after Alphabet's results. The 10-year US Treasury yield hovered around 5%. Japan's Nikkei 225 rose 0.3%.