The Fed’s decision on interest rates strengthened optimism on the stock markets, pushing most of the indexes worldwide into the green.
The Fed kept the benchmark interest rates unchanged in the range of 2.25% to 2.50%. In a very “dove” decision, the central bank also cut its gross domestic product estimate for this year to 2.1% from 2.3% and trimmed its PCE inflation forecast to 1.8% from 1.9%, leaving its core PCE estimate at 2%.
This means, clearly, that it no longer expects any rate hike this year, which is exactly what the financial markets were hoping for, given the slowdown in global growth. Last December, the Fed was still anticipating two quarter-point hikes this year.
Meanwhile, US President Donald Trump has threatened to leave duties on Chinese imports for a “significant period of time” even after a trade agreement is concluded. Donald Trump wants guarantees that after a deal is reached, China will stick to its commitments. The representatives of the US administration have been discussing the possibility of phasing out duties if the Chinese authorities show that they are executing parts of the deal.
Asian markets recap
The indexes on the Asia-Pacific main stock exchanges ended today’s trading session with increases on the background of a decision by the US Federal Reserve to keep key interest rates unchanged, indicating that no new growth is expected by the end of 2019.
In China, the continental index Shanghai Composite rose by 0.35% to 3,101.46 points, while Hong Kong’s benchmark Hang Seng reported a decline of 249.41 points, or 0.85%, to 29,071.56 points, wiping out the growth from the previous session.
On the stock exchange in Seoul, the local index Kospi added 0.36% to its value and ended the session at 2,184.88 points. Samsung Electronics and SK Hynix rose by 4.09% and 7.66% respectively, following Micron’s yesterday’s corporate data on fourth-quarter earnings that exceeded analysts’ expectations.
The Tokyo Stock Exchange today is closed due to a national holiday.
In Australia, the index S&P ASX 200 rose by 0.03% to 6,167.20 points. The companies from the financial sector reported declines. The stocks of the National Australia Bank dropped by 0.44%, while Australian and New Zealand Banking Group and Commonwealth Bank of Australia appreciated by 0.38% and 0.48%, respectively. The slight growth of the S&P ASX 200 is taking place against the backdrop of the report by the Australian Bureau of Statistics, which showed that the unemployment rate in the country is at the 8-year low.
European stocks mid-session recap
European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the US Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.
The pan-European STOXX 600 index dipped 0.3%, driven by falls in Paris, Madrid, and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed’s statement and news conference.
The German index DAX 30 is down by 0.24% to 11,576.14 points at 11:10 GMT. Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank. The shares of the largest German creditor are down by 2.6%. BASF and Bayer are also trading with decreases of 0.5% and 1.8%, which SAP is down by 0.4%. Meanwhile, Siemens shares spiked higher on Thursday following a report saying the German industrial group is exploring merging its turbine unit with an Asian partner. The shares of the company climbed 2.1% in mid-session trading.
French index CAC 40 is up by 4.6 points, or 0.08%, to 5,387.25 points at 11:10 GMT. The stocks of Airbus climber sharply at the beginning of the session, but after that lost ground and wiped out all the gains from the morning. LafargeHolcim is down by 0.67%. STMicroelectronics climbed 1.8% during the session following Micron’s yesterday’s corporate data on fourth-quarter earnings that exceeded analysts’ expectations.
Britain’s top share index rose on Thursday with support from heavyweight oil stocks and miners as investors cheered the USFederal Reserve halting policy tightening. The blue-chip index FTSE 100 is up by 0.6% to 7,335.09 points at mid-session trading on Thursday. Miners derived gains from a weak dollar and on hopes of tighter supply after Vale said it would halt production at a Brazilian mine, while oil majors rose as prices surged amid OPEC supply cuts and US sanctions against Iran and Venezuela. Clothing chain Next underperformed as it fell by 3.1% after its annual profit fell and it guided to another decline in the 2019-20 year.
Wall Street pre-session recap
The US stock index futures fell on Thursday morning as investors digested the Federal Reserve’s latest announcement on monetary policy.
At 7:30 a.m. ET, Dow Jones Industrial Average futures indicated a decline of 147 points at the open. Futures on the S&P 500 and Nasdaq 100 were also down, indicating for a negative start by 12 points and 30 points.
The markets will wait for the jobless claims out at 8:30 a.m. ET.