It’s been a positive start with investors ignoring the Fed’s rate hike to concentrate on an unchanged outlook. Forecasting just two more hikes this year, markets have digested the policy update as less hawkish than it could have been. A USD sell-off has helped Oil and metals extend rebounds, benefiting the likes of dual-listed Miners RIO and BLT down under overnight.
Accendo Markets Analyst, Mike Van Dulken commented – “Wall Street received the Fed’s widely expected rate hike overwhelmingly positively, further helped by the recovery in Crude Oil. The S&P 500 spearheaded the charge for US indices as the Energy sector led risers, while UnitedHealth contributed the most gains on the Dow Jones, offsetting weakness in Financial names to help the index close over 110 points higher.”
For the European markets, there was a lot to process this Thursday morning, with investors breakfasting on the Dutch election result and the aftermath of the Fed’s latest policy decision.
Spreadex Analyst, Connor Campbell noted – “All this led to some chunky gains in Europe after the bell. The DAX and CAC rose 1.1% and 0.8% respectively, leaving the former at a fresh 23 month high. As for the FTSE, it rose more than half a percent to cross 7400 for the first time in its history. The FTSE and pound are arguably lagging behind their Eurozone peers due to the Bank of England’s get-together this afternoon, investors showing a the slightest bit of hesitancy ahead of the meeting.”
In focus today
The markets are likely to continue digesting last night’s Fed policy update and a rather more palatable Dutch election result. Data will centre on confirmation of increased Eurozone Inflation, with ECB President Mario Draghi sounding less dovish. At the same time, the potential is for the BoE policy update to strike a less hawkish tone as slower wages and retail sales growth takes some of the heat out of Brexit-induced inflationary pressures.
ADS Securities Analyst, Konstantinos Anthis commented – “The Bank of England will release their own Rate Decision today and even though we expect no changes in policy the focus will be on the accompanying statement. Given the recent slowdown in all business sectors in the UK, the lagging wage growth and the political challenges posed by the Brexit decision the tone is expected to be a cautious one. The Pound could come under pressure as a result and possibly give up some of its gains.”