The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent, the central bank said in a statement Wednesday following a two- day meeting in Washington. But major USA indexes turned positive shortly after the Fed’s statement, with basic materials and energy sector stocks leading the way as commodity prices rose. That’s in part because investors fear that the falling prices are a sign the global economy is weakening. The Labor Department said its consumer price index dipped by 0.2% in February after coming in unchanged in January.
Advertisement
The Dow rose 22 points, or 0.1 percent, to 17,251. The Dow rose 125 points as she spoke.
A downbeat economic assessment from the Bank of Japan and unease over what the Federal Reserve will decide at its policy meeting on Wednesday are weighing on global stock markets.
Investors were expecting a more upbeat outlook from the Fed on the US economy and interest rates, given generally upbeat economic data over the past month and a half, as well as a more stable global financial market environment.
Oil prices surged on reports that major oil-producing nations will discuss curbing output.
The U.S. dollar fell sharply, with the euro up 0.9 percent and the yen sharply reversing an earlier loss versus the greenback.
United States crude dropped 2.3 per cent to settle at US$36.34 a barrel, after tumbling 3.4 per cent on Monday, while Brent was down 2 per cent to US$38.74.
The jump by the price of oil comes after a report from the Energy Information Administration showed a smaller than expected weekly increase in crude oil inventories.
Peabody Energy Corp. (BTU) plunged more than 30% after the coal company said it may go out of business (http://www.marketwatch.com/story/peabody-energy-shares-crater-30-premarket-after-it-says-it-may-go-out-of-business-2016-03-16).
The Nasdaq Composite was down 26.01 points, or 0.55%, at 4,724.28.
“The market has potentially significant press conferences to assess in the next 24 hours from both China’s Premier Li Keqiang” and Fed Chair Janet Yellen, said Ric Spooner, chief market analyst at CMC Markets in Sydney. Germany’s DAX dropped 0.6 percent to 9,933.85.
Deutsche Bank sank 4.46% and Commerzbank fell 1.08%.
USA stocks edged higher on Thursday as oil prices rebounded and U.S. inflation slowed less than expected ahead of the Federal Reserve’s policy announcement. It’s up 2.3 percent over the last year, the largest gain in nearly four years. Overall inflation slipped in February because of lower gas prices and it’s up just 1 per cent in the past year. Though one of the Fed’s main goals is to prevent runaway inflation, it wants to see inflation rise more than it has in recent years to be sure the economy is healthy enough to handle higher rates.
Wednesday’s reports showed rising core inflation, strong new home construction, and moderately strong factory production. Meanwhile U.S. factories made more machinery, appliances and computer in February.
In Frankfurt, the shares of Deutsche Börse were trading 0.75 percent higher on Wednesday after it announced a merger with the London Stock Exchange Group. South Korean stocks.KS11 were effectively flat while Shanghai.SSEC crawled up 0.1 percent.
Advertisement
LAGGARDS: Utility stocks slipped. Sterling GBP= fell 1 percent to $1.4151. Futures on Australia’s S&P/ASX 200 Index declined 0.1 percent in most recent trading, while those on the Kospi index in Seoul were up that amount.
