Global stocks rise after Fed holds off interest rate hike
Sep 22 2016 by Johnny Bowman
Shares of Apple rose 0.9 per cent to US$114.56 and was the top influence on the S&P and the Nasdaq after Nomura and RBC raised their price targets.
The markets reacted accordingly, United States yields fell, the Dollars was under pressure, while higher yielders outperformed. Still Ms. Yellen sounded like a reluctant bull and it was her tone of indecision more than anything else that prompted the market to run stops against the greenback this morning as Fed funds futures still only give a 50/50 chance of rate hike in December.
At its meeting, the Fed opted to hold rates between 0.25% and 0.5%.
PLDT was also up by 2 percent along with GT Capital and Megaworld. Market pricing for a December move rose only a fraction to 59.3 percent 0#FF: , from 59.2 percent, according to CME Group's FedWatch tool.
The dollar fell broadly Thursday as investors remained skeptical that the Federal Reserve will raise interest rates at all this year. Now it is down to just three.
The Norwegian krone is down by 1.62% to 8.1214 per dollar.
But three officials opposed the decision - the most dissents since December 2014.
The presidential election in the U.S. is just one of them. Norges Bank kept its benchmark rate at 0.50%, in line with expectations, and suggested that the possibility of further rate cuts had diminished.
The RBNZ's blunt statement that further easing would be needed knocked the local dollar down 0.2 per cent to US$0.7334 (RM3.03), but the market has found it hard to sell a currency that still offers an overnight interest rate of 2 per cent.
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So it comes as no surprise then that the FOMC made a decision to keep interest rates unchanged at their September meeting.
In a sign of Wall Street's more optimistic tone following yesterday's Fed decision, the number of stocks closing higher Wednesday trounced losers by a 9 to 1 margin, with almost 90% of total stock market volume skewing to the upside, according to Strategas Research Partners.
Oil prices showed no sign of fading though, having added as much as 3 per cent on Wednesday after a third surprise weekly drop in U.S. crude stockpiles boosted the demand outlook in the world's largest oil consumer.
Another supportive factor was an oil workers' strike in Norway, which threatened to cut North Sea crude output.
On the commodity markets, the November crude oil contract gained 97 cents at US$46.31 per barrel, while the October contract for natural gas fell 3.6 cents to US$3.021 per mmBtu. Market participants saw a relatively low probability for a rate hike with policymakers split over the near-term rate normalization path. We look for the FOMC to hike the Fed funds rate by 25 bps on 14- December.
"The Fed probably appeared less hawkish than what the markets had expected", said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago.
Asian shares rose, with MSCI's broadest index of Asia-Pacific shares outside Japan up 1.2%.
At its two-day meeting which ended on Wednesday, the USA central bank held its target range on short-term rates unchanged at 0.25 percent to 0.50 percent, leaving the door open for a possible rate increase in December.