The Fed did signal it could hike rates by year-end as the labor market improved further, but cut the number of rate increases expected in 2017 and 2018.
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Aside from the potential for Monday’s United States 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. For several days stocks made big moves up and down as investors wondered if that would happen.
One weak spot was Jabil Circuit, which dropped almost 6 percent to $22.34 after the contract electronics maker said it meant to realign its business at a cost of $195 million over two years. Additionally, investors were faced with the challenge of buying because the economy is bad enough for the Fed to stay accommodative and good enough to continue to demand higher risk assets. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.8 basis points at 1.610 percent.
The decision caused bond prices to rise and the USA dollar to fall against other major currencies, which in turn help boost commodity prices since they are priced in dollars.
Gold was already firm in earlier trade, along with stock markets, after the Bank of Japan overhauled its monetary policy framework, switching to targeting interest rates and side lining more than three years of massive money printing.
“There is some consolidation after the very active and positive week for stocks based on news flow from the central banks, said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management”. Shares in BHP Billiton, Anglo American, Rio Tinto and Fresnillo were up 2.7 to 3.4 per cent.
Gold edged down on Friday, after touching a two-week high in the previous session, on a stronger dollar, but was on track for its biggest weekly gain in almost two months. The dollar stabilised against a basket of currencies.
Murphy Oil jumped $1.07, or 4 percent, to $27.58, Transocean rose 38 cents, or 4 percent, to $9.52.
The European oil and gas index was up 1.2 per cent, helped by a 1.3 to 1.5 per cent rise in BP, Royal Dutch Shell and Tullow Oil. The NASDAQ Composite reached a new all-time intraday high of 5342.88, and posted a record close for the second straight session. As of writing, however, the precious metal dipped 0.35% to $1,340.05 per troy ounce. Copper fell 1 cent to $2.16 a pound. London’s FTSE 100 advanced 1.2 percent to 6,917.
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Silver fell 0.6 percent to $19.72. Tokyo’s Nikkei 225 reversed an early loss and closed 1.9 percent higher. Seoul’s Kospi added 0.9 percent to 2,017.94 and Sydney’s S&P-ASX 200 gained 0.4 percent to 5,497.40.
