Gauges of the US yield curve flattened as officials kept the target range for the federal funds rate at 0.25% to 0.5% following a two-day meeting in Washington and scaled back expectations for hikes over the longer run. Markets in Japan were closed for a holiday. Fed officials said they expected that economic growth would not exceed 2 percent over the next three years. Benchmarks in Taiwan, New Zealand and Indonesia also rose, while Singapore declined.
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Gold rose to a two-week high yesterday after the US Federal Reserve’s decision to keep interest rates on hold sent the dollar to its lowest level since the start of last week.
It characterized the near-term risks to the economic outlook as “roughly balanced”.
In currencies, the WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, was recently down 0.3%, after falling 0.7% on Wednesday following the Fed’s decision not to raise interest rates. The statement the Fed released following its two-day policy meeting pointedly said that the case for raising overnight rates had “strengthened”, its projections showed that all but three of meeting participants envisaged higher rates by year-end, and Fed Chairwoman Janet Yellen in her news conference said she was “pleased with how the USA economy is doing”.
Futures markets pointed to Wall Street opening up around 0.5 percent, with attention set to switch to the Fed.
Energy and materials companies had some of the biggest gains.
The Dow Jones industrial average added 163.74 points to 18,293.70, and the Nasdaq Composite Index rose 1 percent.
The Nasdaq composite hit another record high, gaining 44.34 points at 5,339.52. The central bank is charging that rate on excess reserves it holds for banks to encourage them to lend more and said it might cut it further. The eurozone economy is growing slowly, but inflation remains well far below the ECB’s 2 percent annual target. The bank said it will continue asset purchases at a rate of about 80 trillion yen ($787 billion) a year. Japan’s benchmark Nikkei 225 index jumped 1.9 percent on the news. In commodities, the brighter mood on risky assets saw USA crude oil futures up 1.8 percent to $46.71 a barrel. The contract added 69 cents on Wednesday to close at $45.34. USA benchmark crude rose 98 cents to close at $46.32 a barrel, while Brent crude, used to price global oils, gained 82 cents to close at $47.65 a barrel.
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Pub group Mitchells & Butlers gained ground after it reported a drop in full year sales but a rise in the most recent eight weeks of trading, as it reiterated that full-year margins will be below the previous year. It was down 0.1 percent at 100.155 yen, having lost 1.4 percent on Wednesday to touch a 3-1/2 week low of 100.30. It rose more than 2 percent in the prior session to touch its highest since early last week at $1,056.60.
