Oil prices rose about 2 percent, in response to a weaker dollar and a surprise drop in US crude inventories.
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The rally in recent days has been a good sign for stock markets, which are historically negative for the month of September. Add to that the fact that the Fed downgraded the number of rate hikes it sees in coming years and what Wall Street is seeing is a “risk-on” attitude.
Westpac analyst Richard Franulovich noted that back in June the median “dot plot” – the rate moves expected by the Fed’s members – showed five hikes to end-2017.
European markets followed Asia’s lead, with Britain’s FTSE 100 climbing 1.3 percent and Germany’s DAX and France’s CAC 40 both jumping nearly 2 percent ahead of what was expected to be a third day of gains in NY. The yield on the U.S. Treasury 10-year note fell to 1.63 percent from 1.67 percent the day before.
The dollar index dropped 0.5 per cent to 95.189.
In a sign of Wall Street’s more optimistic tone following yesterday’s Fed decision, the number of stocks closing higher Wednesday trounced losers by a 9 to 1 margin, with almost 90% of total stock market volume skewing to the upside, according to Strategas Research Partners. It also reduced its longer-run interest rate forecast to 2.9 percent from 3 percent. The major mover against the dollar, however, was the Norwegian crown, which rose more than 2 percent after Norway’s central bank left its main interest rate unchanged and suggested further rate cuts may not be needed because of a pickup in the economy. The dollar fell to 100.44 yen from 101.84 yen.
BUYBACKS: Microsoft said it will buy back $40 billion in stock and also raised its quarterly dividend. While the USA central bank still sees a rate hike this year, it trimmed its projection for increases in 2017 to two from three.
As for other precious metals, Comex silver for December delivery gained 32.7 cents or 1.6 percent to $20.095 per ounce. Brent crude, used to price worldwide oils, rose $1.17, or 2.6 percent, to $47.05 a barrel in London. The technology giant’s stock rose 95 cents, or 1.7 percent, to $57.76.
BONDS AND CURRENCIES: U.S. government bond prices rose.
Murphy Oil jumped $1.07, or 4 percent, to $27.58, Transocean rose 38 cents, or 4 percent, to $9.52. Natural gas gained 1 cent to $3.06 per 1,000 cubic feet.
NYSE advancing issues outnumbered decliners 4.84-to-1; on Nasdaq, a 2.54-to-1 ratio favored advancers.
Nickel surged 1.7 per cent to $10,525 a metric ton, the highest in six weeks, as the dollar weakened and investors weighed the prospect of more mine closures in the Philippines. Australia’s and Canada’s dollars appreciated at least 0.5 per cent versus the greenback.
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MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 1.1 percent in its sixth straight session of increases, just 0.9 percent shy of its one-year high touched earlier this month.
