“He’s hoping that they hike, he would have loved it yesterday (Wednesday) because he would have just torn into Yellen and make it an issue because Larry Summers would be sitting in one of these seats talking about how Trump’s actually right”, he added, referring to former Treasury Secretary Summers who went on a Twitter rant Wednesday on why the Fed should not raise interest rates in September or even this year.
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USA benchmark crude rose 98 cents to close at $46.32 a barrel, while Brent crude, used to price worldwide oils, gained 82 cents to close at $47.65 a barrel.
The U.S. Fed did highlight the risk of a hike in December, but the forward guidance on rates – known as the dot points – left investors feeling any tightening would be glacial at best.
The Dow Jones industrial average closed up 163.74 points, or 0.9 per cent, to 18,293.7, the S&P 500 gained to finish 23.36 points, or 1.09 per cent higher, to 2,163.12, while the Nasdaq Composite ended up 53.83 points, or 1.03 per cent, to close at 5,295.18, a record high. US shoppers retreated in August to depress retail sales after four straight monthly gains.
“I can emphatically say that partisan politics plays no role in our decisions”, Yellen told reporters after the Federal Open Market Committee’s two-day policy meeting. The yen pushed up by more than one percent to 100.33 to the dollar and 112.27 to the euro.
Dow member Boeing rose 2.2 percent after U.S. officials granted it a license to complete a sale of planes to Iran Air, moving it closer to the first such deal since the 1979 Islamic revolution. Brent crude, used to price global oils, rose 33 cents to $47.16 in London. In the meantime, we can expect more contradictory and backward-looking economic data, more exogenous shocks to the USA and/or global economy, and more speeches from Fed officials – three of whom dissented on the latest decision, suggesting the central bank is no closer to reaching consensus than it was three months ago.
ENERGIZED: Energy companies rose, following oil prices. As more evidence accumulates that the economy continues to grow above its potential rate and labor markets strengthen further with a likely acceleration in wage growth, we believe that the cautious members of the FOMC will feel more confident about meeting their policy objectives and raise rates.
Banco BPI rose 3.6 percent after Spain’s Caixabank launched a bid for the Portuguese lender and slightly raised its offer price.
The decision to stick to the easy money policy for the time being came hours after the Bank of Japan overhauled its own stimulus programme to target inflation and held off cutting interest rates further into negative territory.
Sept 21 Wednesday brought a double gift for risk investors: the usual, as the Federal Reserve declined yet again to raise rates, and the exotic, as the Bank of Japan declined to carry on undercutting its financial sector. Some analysts thought the central bank would take further steps to bolster economic growth, which would have weakened the yen.
Freeport-McMoRan, the mining giant, jumped 44 cents, or 4.2 percent, to $10.98. The contract added 69 cents on Wednesday.
The STOXX Europe 600 Basic Resources index rose 3.9 percent after hitting its highest level since August 2015.
Gold rose $13.20, or 1 percent, to $1,331.40 an ounce.
The greenback also fell toward the 100 yen mark, having rallied close to 103 yen earlier Wednesday in reaction the the BoJ move. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.
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Yellen suggested then that given the job market’s solid gains and the Fed’s outlook for the economy and inflation, “the case for an increase in the federal funds rate has strengthened in recent months”.
