LONDON, Sept 22 (Reuters) – World shares and bonds rallied on Thursday, after the Federal Reserve left US interest rates unchanged and slowed the pace of future hikes, weakening the dollar and lifting commodity prices.
Advertisement
Given that the US presidential election comes just days before the central bank’s next two-day policy meeting in November, a December hike looks extremely likely right now.
FED WATCH: The Federal Reserve kept its key interest rate unchanged Wednesday and signaled it is likely to raise it later this year.
Crude oil prices rose 2.5 percent in midday Wednesday, sending energy stocks higher. The tech-heavy Nasdaq Composite Index advanced 44 points, or 0.8%, to close at 5,339 after touching an intra-day record of 5,342.88.
Aside from the potential for Monday’s USA presidential debate having a big impact on the election, “there’s really nothing on the horizon until earnings season, and the Fed has kind of cleared the way for accommodative policy and low interest rate environment which bodes well for stocks”, said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates in Toledo, Ohio.
The S&P 500 .SPX was up 12.46 points, or 0.58 percent, at 2,175.58. Brent crude, used to price worldwide oils, advanced 58 cents to $46.46 a barrel in London.
Shares of Amazon.com AMZN.O rose 1.4 percent after hitting a record following a price target raise by BMO.
Microsoft Corp. late Tuesday said it would increase its quarterly dividend by 8% over the previous quarter, and it approved a share buyback program of up to $40 billion.
Jabil Circuit fell 4.8 percent to $22.60 after the contract electronics maker said it intends to realign its business at a cost of $195 million over two years.
U.S. labour-market data remained robust with a decline in jobless claims to 252,000 in the latest week from 260,000 previously, although the existing home sales data was weaker than expected with a decline to an annualised rate of 5.33mn from a revised 5.38mn previously.
A report from the National Association of Realtors is expected to show existing home sales rose to a 5.45 million-unit rate in August from a 5.39 million-unit pace in July. Amgen lost 46 cents to $172.92 while Alexion Pharmaceuticals gave up $2.10, or 1.6 percent, to $129.63.
The euro rose to $1.1180 from $1.1157. Natural gas gained 1 cent to $3.06 per 1,000 cubic feet. Copper fell 1 cent to $2.16 a pound.
The Dow Jones industrial average gained 131 points, or 0.7 percent, to 18,425. Diamond Offshore rose 3 percent. Tokyo’s Nikkei 225 reversed an early loss and closed 1.9 percent higher.
The technology index .SPLRCT rose 0.5 percent, giving the benchmark S&P 500 index its biggest boost.
Advertisement
This is mainly due to a slightly more dovish Federal Reserve and as the Bank of Japan announced new set of policy measures aimed at extending its quantitative easing program in order to overcook inflation.
