Stocks: US Stocks Gain, Dollar Sinks After Fed Decision
STOCKS – U.S stocks gained after the Fed announced its intention to be “patient” on the future interest-rate moves. The move signaled flexibility towards reducing its balance sheet.
The S&P 500 index progressed toward an eight-week high as traders processed Fed statement. Fed called for some “gradual increases” in interest rates.
The dovish statement eased fears that policymakers would continue to raise interest rates despite data suggesting the economy is cooling.
Major estimates were already higher on the day as tech shares rallied after Apple Inc (NASDAQ: AAPL)’s results beat estimates. Also, Boeing (NYSE: BA) Co.’s positive report helped boost industrial stocks.
In January, corporate earnings offered some reassurance after a series of lackluster results. Now, all eyes will be on giants such as Facebook (NASDAQ: FB) and Microsoft (NASDAQ: MSFT) reports today.
Meanwhile, U.S-China trade talks are ongoing in Washington to resolve the current dispute.
Brett Ryan, a U.S. economist at Deutsche Bank AG, said, policymakers took a step in a very dovish direction and were going to hold for a little bit.
On Tuesday, the pound gained after losses. The gain came after lawmakers voted against the proposal which sought to rule out the prospects of Brexit without a deal.
U.K companies led the Stoxx Europe 600 Index’s gains. Theresa May and lawmakers backed a proposal to strip out the most challenging part of her proposed divorce package. Instead, re-open talks with the European Union.
Elsewhere, Brazil’s Vale SA- the world’s largest metal producer outlined plans to reduce output after a deadly dam breach. The announcement caused iron ore to surge.
Stocks: Asia stocks climb to four-month high as Fed turns more cautious; dollar sags
On Thursday, Asia stocks rose to a four-month high. This was after the Fed Reserve promised to be patient with further interest rate hikes. The move signaled a possible end to its tightening cycle amid signs of global economic slowdown.
The dollar struggled near a three-week trough against its major peers. The U.S. Treasury yields were significantly lower as investors reacted to the Fed’s change in tone.
On Wall Street, the Nasdaq and Dow rallied 2.2% and 1.7% respectively. It’s on hopes the Fed’s pause would give the U.S economy and corporate profits more room to run.
In December, the Dow had sunk to the lowest level since September 2017. Worries over cooling economic growth and trade tensions add pressure on the Fed to reassess its tightening policy.
“The Fed’s statements firmly confirmed its dovish stance, which had already been on display at the start of the year. Market concerns towards the Fed’s rate hikes have now rested,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo