Federal Reserve Chair Janet Yellen on Wednesday rebuffed accusations from presidential candidate Donald Trump that the Fed plays politics with its interest rate policy. Three FOMC members – Esther George, Loretta Mester and Eric Rosengren – dissented, preferring to raise rates now.
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The British pound gave back some of the previous session’s gains made after a Bank of England policymaker said she saw no case for a further cut in interest rates to boost the economy following Britain’s vote to leave the European Union.
This decision removed the single largest risk to stocks heading into the USA presidential election in November, and should clear the way for a nice relief rebound out of the tight three-month trading range we’ve suffered.
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.
In other currency moves, the Australian dollar traded up 0.3% at $0.7649 USA, likely boosted by the Fed’s decision to keep interest rates on hold, which in turn pushed the greenback lower.
Oil prices rallied to a two-week high on Thursday, helped by USA government data that showed a surprising crude inventory drop.
In its updated forecasts, the Fed lowered its expectation for the long-range level of its benchmark interest rate to 2.9 percent, from the 3 percent it had forecast in June and 3.5 percent before then.
Before that also comes the uncertainty of USA elections, added GAM’s Hatheway.
“The Fed appears to be firmly on track for a December hike”, Paul Ashworth, chief US economist at Capital Economics, said after the statement was issued.
The Nasdaq Composite was up 18.58 points, or 0.35 per cent, at 5,259.94. That’s the interest rate level the Fed reckons will be enough to keep growth on an ticking over.
Municipal bond yields dipped following the Federal Reserve’s policy meeting on Wednesday, recovering slightly by the end of the week. The yield on the 10-year Treasury note fell to 1.66 percent from 1.69 percent. It edged down 0.1 percent to $1.1197 EUR=, aiming for a 0.3 percent weekly gain. Some analysts thought the central bank would take further steps to bolster economic growth, which would have weakened the yen.
At 5 p.m., the dollar stood at ¥100.99-101.00, down from ¥101.80-82 at the same time Wednesday, after dropping below ¥101 for the first time here since August 26.
Adding to their gains from a day earlier, oil and gas stocks snapped higher in early trading Thursday. The Securities and Exchange Commission said hedge fund manager Leon Cooperman and Omega Advisors illegally traded on insider information by buying shares of a natural gas company before it sold a natural gas facility, which sent its stock soaring. The technology giant’s stock rose 95 cents, or 1.7 percent, to $57.76. Freeport-McMoRan, the mining giant, jumped 36 cents, or 3.5 percent, to $10.90.
In commodity markets, gold traded down 0.3 percent at $1,332.63 an ounce, having climbed 1.7 percent as the USA dollar declined on Wednesday.
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The euro fetched $1.1196, recovering from Wednesday’s three-week low of $1.1123. Silver gained 49 cents, or 2.5 percent, to $19.77 an ounce. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.
